Factbox: The knowns and unknowns of U.S. Iran oil sanction waivers

Industrial Bank Of Korea

08/11/2018 07:52

Nov 8 (Reuters) - The United States on Monday re-imposed
sanctions against Iran's oil exports to punish Tehran for its
involvement in several Middle Eastern conflicts.
    Washington had been pushing governments to cut imports of
Iranian oil to zero. But, fearing a price spike, it granted
Iran's biggest buyers - China, India, South Korea, Japan, Italy,
Greece, Taiwan and Turkey - sanctions waivers.
    That will allow the eight, which account for about 75
percent of all Iran's oil exports, according to trade data, to
import at least some oil for another 180 days.  urn:newsml:reuters.com:*:nL4N1XH2KV
    Washington and the recipients of the waivers have not
disclosed how much oil they are allowed to import, or under what
conditions deals can still be made.
    Analysts have estimated the overall volumes allowed under
the waivers at between 700,000 and 1.7 million barrels per day
(bpd) compared with a peak of around 3 million bpd in Iranian
crude and condensate exports in mid-2018.  urn:newsml:reuters.com:*:nL4N1XH2KV
    J.P. Morgan said "the lack or difficulty in acquiring
shipping insurance will help in reducing exports quickly as they
did during last international sanctions."
    The U.S. bank also said "payments for the oil by the exempt
countries must go into escrow accounts in their local currency"
and that this "means the money won't directly go to Iran and it
can only be used to buy certain non-sanctioned goods from its
crude export customers."
    Once the waivers expire after 180 days, new waivers are
expected to be issued, with a source in China saying his country
would likely receive another six months of exemptions, though at
a lower rate of around 220,000 bpd.
    For further details, see below.
    
    CHINA
    China, the world's biggest importer of crude oil, is also
the top buyer of Iranian oil, and its mostly state-owned
refiners have lobbied hard for waivers.
    Several Chinese sources with knowledge of the matter said
China would be allowed to buy 360,000 bpd of Iranian crude
during the exemption period of 180 days.
    That would be about half the daily average China has been
importing from Iran since January 2016, trade data showed.
    However, one source said the United States had attached
strings to the waivers, including counterparty disclosures and
laying open settlement methods, which were being evaluated
before placing new orders with Iran.
    
    INDIA
    India has become the world's third-biggest oil importer,
recently overtaking Japan.
    India is also Iran's second-biggest oil customer and will be
one of the most exposed to a forced drop in supply because of
its relative proximity to Iran.
    One Indian source close to the country's refining sector
said India would likely be allowed to import around 300,000 bpd
of Iranian crude during the exemption period compared with
normal volumes of around 450,000 to 550,000 bpd.
    
    SOUTH KOREA
    South Korea is a large buyer of Iranian condensate, a super
light form of crude oil, used by its large petrochemical
industry.
    A close U.S. ally, South Korea had stopped buying crude from
Iran ahead of the sanctions while still lobbying for exemptions.
    This week, reports emerged that South Korea received a
waiver allowing it to import around 4 million barrels a month,
equal to about 130,000 bpd, of Iranian crude and condensate.
 urn:newsml:reuters.com:*:nL4N1XH30N
    South Korea has averaged over 200,000 bpd of oil imports
from Iran so far this year, down from around 350,000 bpd in
2017.
    Banking sources said any Korean payments for Iranian oil
would need to be made in its won currency  KRW= .
    The won-denominated payments will go into escrow accounts
handled by the Industrial Bank of Korea (IBK)  024110.KS  and
Woori Bank  000030.KS .
    Officials from both banks said, however, that
won-denominated payments for Iranian oil were still being
reviewed, and that no schedule a for resumption was set yet.
    
    JAPAN
   , another key Asian U.S. ally, also ceased Iranian oil
imports prior to the sanctions, but has received a waiver to
import an undisclosed amount of oil from Iran in the next 180
days. 
    Japan's trade minister, Hiroshige Seko, said on Tuesday that
Japanese buyers were expected to resume imports from the Islamic
Republic again soon.
    Refining sources in Japan, however, said they first needed
to evaluated the conditions attached to the waivers, with no new
orders likely before December.  urn:newsml:reuters.com:*:nL4N1XI2DL
    
    TAIWAN
    Taiwan is only an occasional importer of Iranian oil, and no
details regarding its waivers have been disclosed.
    
    TURKEY, ITALY, GREECE
    Italy and Turkey have been importing around 200,000 bpd of
oil from Iran over the past two years, with Greece importing
less than 100,000 bpd.
    Italy and Greece have completely suspended purchases in
recent weeks. The waivers for those countries took the market by
surprise and trading sources have said they are now evaluating
prospects for resuming some imports.
    Turkey has said it is also evaluating possible imports after
receiving a waiver, but President Tayyip Erdogan said on Tuesday
the country would not abide by the sanctions as they were aimed
at "unbalancing the world".  urn:newsml:reuters.com:*:nL8N1XH1Y8

 (Compiled by Henning Gloystein in SINGAPORE, Dmitry Zhdannikov
in LONDON and Yena Park in SEOUL; Editing by Mark Potter and
Christian Schmollinger)
 ((Dmitri.Zhdannikov@thomsonreuters.com;))