US Sanctions Drive Iran's Economy Into Recession

Ivan Schwartz
October 10, 2018

Although US sanctions against Iran begin on November 5, the US State Department is reportedly looking at reduction waivers for individual countries - with India cited - to give them more time to replace oil imports from Iran. Of the 220.4 million metric tonnes (million MT) of crude oil imported by India in 2017-18, about 9.4 per cent, was from Iran.

The Islamic Republic exported 1.1 million barrels per day (bpd) of crude in that seven-day period, Refinitiv Eikon data showed.

Making this projection in an interview with Reuters at the World Bank Conference in London, he stated that so long as USA sanctions take effect on Iran in November, "I do not expect the price to close less than $80 this year".

Wells, who was in New Delhi earlier this month as part of the delegation accompanying US Secretary of State Mike Pompeo for the India-US "2+2" dialogue, said there was no "blanket waiver or country-specific waiver" from US sanctions on trading with or investing in Iran or buying arms from Russian Federation.

India, a major buyer, has ordered Iranian oil for November, although New Delhi does not yet know whether it will receive such a waiver.

India will defy U.S. sanctions and continue importing oil from Iran after a November 4 deadline, easing concerns over the country's energy security but setting up a possible showdown with Washington.

Iran is India's third-largest oil supplier behind Iraq and Saudi Arabia.

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That's down from at least 2.5 million bpd in April, before President Donald Trump in May withdrew the US from a 2015 nuclear deal with Iran and reimposed sanctions.

India is Iran's second-largest single oil customer after China and was expected to cut back on Iranian oil purchases following United States sanctions.

By Navneet Damani Crude oil prices continued to rally for yet another week, as traders stayed focussed on potential disruptions to global crude supplies in the upcoming week, as looming USA sanctions on Iran are widely expected to lead to a tighter market. Brent crude on Wednesday last week reached $86.74 a barrel, the highest since 2014. "We will be guided by our national interest", he added.

The news of India's continued importation of Iranian crude had a positive effect on oil prices, with Brent crude down 1.6% to $82.79 at the time of writing on Monday morning. Even in the case of Iran there is an expectation that its oil exports may fall less sharply than feared, while Libya's oil production has stated to rise. An industry source who also tracks exports said October shipments so far were below 1 million bpd.

The government last week effected a Rs 2.50 per litre cut in prices of petrol and diesel to ease inflationary pressure and boost consumer confidence.

"The basic point is that they are all government companies", Mr. Pradhan said.

Other reports by GizPress

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