By Jessica Donati and Courtney McBride
WASHINGTON -- Oil prices surged to a nearly six-month high after
the Trump administration said it would end waivers that allow
countries to import Iranian oil, part of a U.S. campaign to deprive
Iran of a major source of revenue.
Monday's swift market reaction, coupled with stern objections
from at least two countries that will be adversely affected, ran
counter to Trump administration assurances that its latest move
against Iran would have relatively few broad international
repercussions.
The administration last year withdrew from the 2015
international nuclear agreement with Iran and reinstated sanctions
against Tehran, threatening punitive measures against countries
that continued to purchase Iranian oil.
But Washington granted eight jurisdictions six-month waivers to
continue to buy Iranian crude, giving them time to taper off the
imports. The waivers expire May 2 and won't be renewed, the
administration said Monday.
"We're going to zero -- going to zero across the board," said
Secretary of State Mike Pompeo.
Mr. Pompeo said the administration's goal is to deprive Iran of
the funds it uses to support its expanded influence in the Middle
East. So far, sanctions have deprived the regime of more than $10
billion in oil sales, he added.
Oil prices reacted immediately, with the global benchmark price
surging above $74 a barrel, a nearly six-month high. Rising oil
prices could exert upward pressure on gasoline prices.
Mr. Pompeo said the U.S. had received assurances that Saudi
Arabia and the United Arab Emirates would help keep the world
market adequately supplied, and that U.S. production increases also
would play a role.
Saudi Arabia declined to commit to increasing oil output on
Monday. The kingdom's energy minister, Khalid al-Falih, said it
would coordinate with other oil producers to keep the market
balanced. Neither U.S. nor Saudi officials have said what price
level reflects a balanced market.
A senior Trump administration official, asked about the
oil-price surge, said global crude markets had expected the waivers
to continue. But the official said the price increase would prompt
producers to boost supply to replace the Iranian oil. The official
added that U.S. oil production capacity had risen enough over
recent years to compensate for the loss of Iranian oil.
Global oil supply tightened this year after the loss of oil from
Iran and Venezuela, which also has been targeted by U.S. sanctions.
The latest outbreak of chaos in Libya, another major oil producer,
has added to uncertainty over supply.
The White House announcement drew an angry response from China
and Turkey, two countries that have been Iran's major customers and
held U.S. waivers. Both had expected to receive extensions to
continue to import Iranian oil.
"China consistently opposes U.S. unilateral sanctions and
long-arm jurisdiction," Geng Shuang, a spokesman for China's
Foreign Ministry, said Monday. "China-Iran cooperation is open,
transparent and in accordance with law, it should be
respected."
The Turkish government said the U.S. move would harm the Iranian
people and fuel tension in an already volatile region. The decision
"will not serve regional peace and stability," Turkey's foreign
minister, Mevlut Cavusoglu, said in a tweet. "Turkey rejects
unilateral sanctions."
Last year, Turkish President Recep Tayyip Erdogan said his
country would ignore the U.S. embargo on Iranian oil, but Turkish
business leaders generally said they would comply to avoid getting
caught in U.S. crosshairs.
In India, another purchaser of Iranian oil, the Ministry of
External affairs declined to comment Monday. Cutting Iranian
imports would be difficult, but New Delhi is likely to abide by
U.S. sanctions rules and seek alternative oil sources, a top
official in Prime Minister's Narendra Modi's office said.
The other jurisdictions that hold expiring waivers are Greece,
Italy, Taiwan, Japan and South Korea. Greece, Italy and Taiwan are
believed to have eliminated imports from Iran. South Korea and
Japan didn't immediately respond to requests for comment.
An Iranian foreign ministry spokesman called the U.S. threat of
sanctions "basically illegal," according to the semiofficial ISNA
news agency. Iran, like Turkey, maintains that unilateral sanctions
by one country are invalid.
The U.S. decision could threaten Saudi exports as well. A
commander in Iran's hard-line Islamic Revolutionary Guard Corps
vowed Monday to interrupt the flow of oil through the Persian
Gulf's Strait of Hormuz -- the route used for most shipments from
Iran and Saudi Arabia.
"If we are barred from using [the Strait,] we will close it,"
IRGC Naval Forces commander Alireza Tangsiri told Iranian state TV
network Al Alam. "We will defend our honor and wherever it comes to
defend Iran's rights, we will retaliate."
The senior administration official warned Tehran against
threatening to close the Strait of Hormuz. "They should know that's
something we would find unacceptable," the official said, without
elaborating.
While U.S. sanctions have hurt Iran's economy and strained the
government's budget, they haven't led Tehran to pull away from its
military role in Syria in support of President Bashar al-Assad or
scale back its paramilitary role in the region, both U.S.
goals.
Mr. Pompeo said the U.S. would allow no waivers after the
current round expires May 2, but didn't rule out the possibility of
limited exemptions. "I think we've always been very fair about this
-- if there is a particular transaction that is incidental -- all
right, so I don't want to foreclose the possibility, but there will
be no waivers," he said.
Iran is on track to be a foreign-policy issue in the run-up next
year's U.S. presidential election. Some Democratic candidates
pledge to return to the 2015 nuclear accord that aimed to curtail
Iran's nuclear program in exchange for relief from international
sanctions.
Mr. Trump's withdrawal from the pact with Iran and six major
powers last year undid a flagship foreign policy effort of
President Obama.
The decision to end oil waivers comes after months of pressure
by Republican hawks. Senator Ted Cruz (R., Texas) on Monday praised
the move in a statement calling for the Trump administration to
take further steps to curb Iran's finances.
"The administration should also take the long overdue step of
ending civil-nuclear waivers, which allow the Iranians to continue
nuclear-related work," Mr. Cruz said.
The Trump administration has outlined 12 demands on Iran, which
include Tehran giving up its right to enrich uranium, which it
retained under the 2015 agreement; cease its support for militant
groups such as Hamas; and stop issuing threats against Israel.
Mr. Pompeo said Monday the U.S. would be open to talks with Iran
once the country's leaders agreed to meet the list of demands.
--Benoit Faucon, Summer Said, Aresu Eqbali and Timothy Puko
contributed to this article.
Write to Jessica Donati at jessica.donati@wsj.com and Courtney
McBride at courtney.mcbride@wsj.com
(END) Dow Jones Newswires
April 22, 2019 19:46 ET (23:46 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.