Oil Market Conditions Allowing Countries to Forgo Iran Sanctions Waivers, U.S. Official Says

'There are better market conditions for us to accelerate our path to zero,' said special U.S. envoy for Iran Brian Hook. 'We are not looking to grant any waivers or exceptions to our sanctions regime'

FILE PHOTO: Gas flares from an oil production platform at the Soroush oil fields in the Persian Gulf, south of the capital Tehran, July 25, 2005.
\ Raheb Homavandi/ REUTERS

Three of eight importers granted waivers by Washington to buy oil from Iran have now cut their shipments to zero, a U.S. official said on Tuesday, adding that improved global oil market conditions would help reduce Iranian crude exports further.

The United States reimposed sanctions on Iran after President Donald Trump last May withdrew the country from a 2015 nuclear deal between Iran and several world powers, accusing it of supporting terrorism and conflicts in Syria and Yemen. 

While the United States has set a goal of completely halting Iran's oil exports, it granted temporary import waivers to China, India, Greece, Italy, Taiwan, Japan, Turkey and South Korea to ensure low oil prices and no disruption to the global oil market. 

The Trump administration is currently in consultations with the importers ahead of a May 2 deadline when the waivers expire. 

"In November, we granted eight oil waivers to avoid a spike in the price of oil. I can confirm today three of those importers are now at zero," Brian Hook, the special U.S. envoy for Iran, told reporters. Hook did not identify the three. 

>> In Warsaw, dream of Arab NATO against Iran shows its cracks | Analysis

"There are better market conditions for us to accelerate our path to zero," Hook said. "We are not looking to grant any waivers or exceptions to our sanctions regime." 

Hook said U.S. oil sanctions against Iran had removed about 1.5 million barrels of Iranian oil exports from the market since May 2018. "This has denied the regime access to well over $10 billion in (oil) revenue - a loss of at least $30 million a day," he said. 

Oil prices on Tuesday hit their highest level so far in 2019, with Brent crude approaching $70 a barrel on the prospect that more sanctions against Iran and Venezuelan disruptions could deepen an OPEC-led supply cut. 

Analysts believe the administration is likely to extend the waivers to the remaining five importers to placate top buyers China and India and to decrease the chance of higher oil prices. 

China, India, Japan, South Korea and Turkey are likely to be given waivers that could cap Iran's crude oil exports at about 1.1 million barrels per day, U.S.-based analysts at Eurasia Group said in January. That would remove Italy, Greece and Taiwan from the waivers list. 

Hook said a decision on whether to extend the waivers would be made "in due course." A total of 23 importers that once took Iranian oil had cut imports to zero, he added. 

"With oil prices actually lower than they were when we announced our sanctions and global production stable, we are on the fast track to zeroing out all purchases of Iranian crude," Hook said. 

A senior Trump administration official told reporters on Monday that the U.S. government was considering additional sanctions against Iran that would target areas of its economy that have not been hit before. 

Hook said more than 26 rounds of U.S. sanctions against Iran had restricted the country's cash flow and constrained its ability to operate in the region. 

Earlier on Tuesday, U.S. Secretary of State Mike Pompeo blamed Iran's government of mismanagement that has led to devastating flooding across the country. At least 47 people have been killed in the past two weeks from flash floods.