Iran sanctions set to kick in, could bring biggest oil disruption in years

[harrybarracuda]

Midnight on Sunday will mark a dividing line in the world of oil. Beyond that point, anyone unloading a tanker from Iran risks the full wrath of the US government.



While the US softened its crackdown on the Middle East’s third-biggest oil producer on Friday, allowing some trade to continue, exports are already slumping. Shipments have plunged 37 per cent since President Donald Trump announced that he’d reimpose sanctions, and once those penalties kick in on November 5, the overall supply disruption could become the biggest since Libya, erupted in civil war at the start of the decade.


“Iran’s oil exports are falling rapidly, and perhaps more and more in the weeks to come,” Fatih Birol, executive director at the International Energy Agency, said in a Bloomberg television interview.

The US will grant partial exemptions, known as waivers, to eight governments on condition that any purchases from Iran are at “greatly reduced levels,” Secretary of State Michael Pompeo said on Friday. But the Trump administration ultimately seeks to squeeze Iran’s sales towards “zero” -- potentially leaving a gap that even major producers like Saudi Arabia would struggle to fill.

US oil futures climbed to a four-year high near $77 a barrel last month on growing concerns there could be a shortage as sanctions bite deeper. Prices have since eased, aided by the US decision to allow waivers for India, Japan, South Korea and others. Nonetheless, significant risks remain.

Analysts don’t expect a complete halt, but there’s a growing consensus that Trump’s tough stance means crude exports will plunge further than during a previous round of sanctions under Barack Obama’s administration in 2012. Back then they were sliced in half to 1 million barrels a day, according to the IEA, which advises industrialized countries on energy policy.


This time, 1.1 million barrels a day have already been cut from Iran’s shipments -- a combination of crude and a light oil called condensate that was spared from curbs in 2012 -- according to data compiled by Bloomberg. Production hasn’t fallen as much as some output is going into storage. About 1.76 million barrels a day were exported in October, more than is pumped from the North Sea.

“A large part of the impact has not happened yet,” said Mike Wittner, head of oil-market research at Societe Generale SA. “Price-wise, there’s still some upward pressure to come -- possibly a big wave of upward pressure. Things are going to tighten up.”

Europe Retreat

After Trump withdrew from the nuclear deal with Iran and reimposed sanctions, European governments vowed to try and preserve the agreement and find ways to continue trading. The region’s intake of Iranian crude has nonetheless wilted. Companies like Total SA and Royal Dutch Shell Plc have halted purchases because the risk of being frozen out of the US financial system is simply too great.

China -- the leading importer of Iranian crude -- is still in discussions with the US on terms, but is among the eight countries permitted to keep buying Iranian oil, according to two people familiar with the discussions.

Iran says it’s confident sales will hold above 1 million barrels a day. Indeed, with US gasoline prices still relatively high and midterm elections just days away, Trump has some incentive to soften his offensive.

Midterms Approach

“The US will take its foot off the gas on sanctions and ease pressure in getting to zero right at the start in order to not cause a rise in oil prices in the lead-up to elections,” said Robin Mills, head of Dubai-based consultant Qamar Energy. “Then they will pick up pressure towards the end of the year to cut Iran’s sales.”

The impact of the sanctions has already been cushioned by other oil producers, notably some of Iran’s counterparts in the Organization of Petroleum Exporting Countries. Saudi Arabia has increased production by 780,000 barrels a day since April, according to data compiled by Bloomberg.

The extent to which the kingdom can keep this up in the coming months depends on how many idle oil fields it’s able to tap. The IEA sees Saudi Arabia having about 1.3 million barrels a day of spare capacity. Others such as Russia, the United Arab Emirates and Iraq could potentially squeeze out a little more as well.

If the US does, in the end, follow through on its strongest threats, choking off Iranian supplies entirely, that spare capacity could be completely exhausted, leaving almost nothing left to cover unexpected disruptions in other trouble spots.

“If there’s almost no cushion left and something happens in Libya or Nigeria, then you’re stuck,” said Societe Generale’s Wittner. “That’s where the market could see a big price reaction.”

https://www.business-standard.com/ar...0300175_1.html

[Neverna]

I wonder if the EU's bank transfer system is up and running yet. The Trump regime has said it will impose sanctions on SWIFT if it is used to pay for Iranian oil or other items uner the Trump regime's sanctions list.

[Cujo]

If I was Iran I would batten down the hatches and cut off supply altogether. See what happens then.

[Dragonfly]

I wonder if the EU's bank transfer system is up and running yet. The Trump regime has said it will impose sanctions on SWIFT if it is used to pay for Iranian oil or other items uner the Trump regime's sanctions list.

SEPA or TARGET2 ?

[Neverna]

^ I've no idea of the name.

I have read that the Russians (and possibly Chinese) are also in the process of setting up their own system to avoid using SWIFT.

[jabir]

If I was Iran I would batten down the hatches and cut off supply altogether. See what happens then.

Iran could confirm and extend sanctions by accidentally sinking a tank convoy in the Strait. And might as well save a bundle by using their fleet of offshore storage tankers.

[Klondyke]

anyone unloading a tanker from Iran risks the full wrath of the US government.

e.g. China, Russia, ao....

[Dragonfly]

this is actually good news, with an idiot like Trump at the top, we need to reconsider our current global commerce framework

about fooking time,

[harrybarracuda]

So much for disruption, baldy orange cunto is giving eight countries a free pass, meaning Iran can still sell its oil.

And with it probably including China and India, they shouldn't have any real problems.

[Klondyke]

Iran sanctions set to kick in

So, who needs UN SC (and its cute sheriff) for imposing sanctions?

[Neverna]

SEPA or TARGET2 ?

SPV (Special Purpose Vehicle)


https://www.bbc.com/news/world-middle-east-46059036


Getting around sanctions

In order to allow companies to trade with Iran and not face stiff US penalties, the EU plans to implement a payment mechanism - a Special Purpose Vehicle (SPV) - that will enable these companies to avoid the US financial system.

Like a bank, the SPV, would handle transactions between Iran and companies trading with it, avoiding direct payments into and out of Iran.

So when Iran exports oil to a country in the EU, the company from the receiving country would pay into the SPV.

Iran can then use the payment as credit to buy goods from other countries in the EU through the SPV.

The EU has also updated a statute - called a blocking statue - that allows EU firms to recover damages from US sanctions.

[Neverna]

So much for disruption, baldy orange cunto is giving eight countries a free pass, meaning Iran can still sell its oil.

And with it probably including China and India, they shouldn't have any real problems.

The Trump administration has granted exemptions to eight countries to continue importing Iranian oil, without naming them.

They are reported to include US allies Italy, India, Japan and South Korea, along with Turkey and China.

Mr Pompeo said the countries had already made "significant reductions in their crude oil exports" but needed "a little bit more time to get to zero".

He said two would eventually stop imports and the other six would greatly reduce them.

https://www.bbc.com/news/business-46092435

[OhOh]

the EU plans to implement a payment mechanism - a Special Purpose Vehicle (SPV) - that will enable these companies to avoid the US financial system.

One suspects "the planning" is getting a little late. China and Russia have reportedly a SWIFT alternate, why not just use it, if in fact it exists.

[OhOh]

Mr Pompeo said the countries ....... but needed "a little bit more time to

Maybe Dec 2020 might be the decision time.

Mr Pompeo said the countries had already made "significant reductions in their crude oil exports

Presumably he meant "imports".

[harrybarracuda]

SVP (Special Purpose Vehicle)

Dyslexia can warn without striking.

[Neverna]

^ Good catch, 'arry.

[harrybarracuda]

^ Good catch, 'arry.

[Neverna]

Good Lord. Europe has Captain Scarlet on its side. Not to mention Troy. Watch out world!

[OhOh]

The Trump administration has granted exemptions to eight countries to continue importing Iranian oil, without naming them.

"Update (8:40 am ET): The following countries will receive 'temporary' waivers excusing them from US sanctions on Iranian oil exports.

• South Korea
  
• Taiwan
  
• Turkey
  
• Greece
• Japan
  
• China
  
• India
• Italy"

https://www.zerohedge.com/news/2018-...ctions-waivers
It appears that ameristan considers Taiwan not part of China, officially.

[harrybarracuda]

"Update (8:40 am ET): The following countries will receive 'temporary' waivers excusing them from US sanctions on Iranian oil exports.

• South Korea
  
• Taiwan
  
• Turkey
  
• Greece
• Japan
  
• China
  
• India
• Italy"

https://www.zerohedge.com/news/2018-...ctions-waivers
It appears that ameristan considers Taiwan not part of China, officially.

Most people don't think Taiwan is part of China.

They think China is part of Taiwan.

[Klondyke]

Who needs a "Free Trade"?

[jabir]

So much for disruption, baldy orange cunto is giving eight countries a free pass, meaning Iran can still sell its oil.

And with it probably including China and India, they shouldn't have any real problems.

It's temporary, to fulfil existing orders and wean them onto other sources, not that after recent trade war poker he'd nuke China over a few barrels of oil.

[harrybarracuda]

It's temporary, to fulfil existing orders and wean them onto other sources, not that after recent trade war poker he'd nuke China over a few barrels of oil.

China will continue to import Iranian oil after the waiver finishes, because the Iranians will sell it to them cheap and they won't give a fuck about baldy orange cunto.

[OhOh]

[OhOh]

Work on Creation of EU Mechanism to Bypass US Anti-Iran Sanctions Stepped Up

14:17 07.11.2018(updated 14:57 07.11.2018)

"Earlier, the United States re-imposed a second portion of sanctions against Iran, with the latest measures concerning the country's oil exports among other things.

The European Union has stepped up work on the creation of a special mechanism that will facilitate trade with Tehran amid US sanctions, Maja Kocijancic, the European Commission's spokeswoman for foreign affairs and security policy, said at a press briefing on Wednesday.

"The work on setting up the SPV, or the special purpose vehicle, is continuing, and is actually accelerated," Kocijancic said.

She specified that the mechanism would enable European exporters and importers to pursue legitimate trade with Iran.

The European Union regrets the banking transfers operator SWIFT's move to suspend Iranian banks from the service, a European Commission representative said.

"We've noted the decision of the SWIFT, and we find this decision, or rather the disconnection, regrettable as it risks affecting the integrity of the international financial system. We as the European Union remain committed to supporting the Iran nuclear deal, the JCPOA, as a matter of our own security, and will therefore continue to seek to preserve the benefits that arise from this agreement," Kocijancic said."

https://sputniknews.com/world/201811...ism-sanctions/