US terminates Iran sanctions waivers: Update

Adds remarks from secretary of state Mike Pompeo

President Donald Trump will not renew waivers from US sanctions for the remaining buyers of Iranian oil, the White House said today.

The administration in November issued six-month exemptions from US sanctions to enable China, Greece, India, Italy, Japan, South Korea, Taiwan and Turkey to continue buying Iranian oil. But it has decided not to renew them after 3 May "to bring Iran's oil exports to zero, denying the regime its principal source of revenue."

Riyadh and Abu Dhabi already are negotiating directly with Iran's remaining customers to make up the shortfall in supply, secretary of state Mike Pompeo said today.

Saudi Arabia and the UAE have assured Washington they will make up the gap left by eliminating exports from Iran, Pompeo said. "I have had conversations, the president has had conversation (with Saudi and UAE leaders) and they have committed to ensuring enough supply in the market."

The announcement implies that Riyadh and Abu Dhabi will abandon the Opec production cut agreement in effect through the end of June.

While Italy, Greece and Taiwan already have stopped imports from Iran, Asia-Pacific crude importers would face a scramble to replace more than 1mn b/d of Iranian imports to comply with the US decision to end sanctions waivers.

Pompeo contends the decision to end the Iran waivers will not affect the stability of global oil markets. "The oil market remains well supplied, he said.

But the decision will put an additional strain on the global supply at a time when the US is separately enforcing sanctions on Venezuelan oil exports.

Pompeo cited US Energy Information Administration data to make the case that the oil market is well supplied. But the agency in its most recent assessment of the effects of sanctions on Iran suggested the opposite would be true if that Opec country were to be cut off from the market.