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  1. ITV Report

Iranian oil importers to be subjected to sanctions, US announces

Secretary of State Mike Pompeo made the announcement on Monday at a news conference. Credit: AP

The Trump administration has announced it will no longer exempt any countries from US sanctions if they continue to buy Iranian oil, increasing economic pressure on the Middle Eastern country.

The White House is stepping up pressure on Iran in a move that primarily affects the five remaining major importers – China and India, and the US treaty allies Japan, South Korea and Turkey.

President Donald Trump made the decision as part of the “maximum pressure” campaign on Iran, although Turkey and China have already criticised the administration.

Iran has also brushed off the decision.

President Donald Trump made the decision as part of the 'maximum pressure' campaign on Iran. Credit: Pablo Martinez Monsivais/AP

The move aims to eliminate all of Iran's revenue from oil exports, which the US says funds destabilising activity throughout the Middle East and beyond.

“This decision is intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue,” the White House said in a statement.

Announcing the step, Secretary of State Mike Pompeo said no more sanctions waivers would be granted when the current batch expire on May 2, choking off Iranian income that had been more than £38.5 billion a year.

“The goal remains simply to deprive the outlaw regime of the funds that it has used to destabilise the Middle East for decades and incentivise Iran to behave like a normal country,” Secretary of State Mike Pompeo told reporters at the State Department.

Secretary of State Mike Pompeo says the aim is to deny of Iran of its principal source of revenue. Credit: AP

The administration granted eight waivers when it reimposed sanctions on Iran in November after Mr Trump pulled the US out of the landmark 2015 nuclear deal.

The waivers were issued in part to give the countries they were issued to more time to find alternate energy sources, but also to prevent a shock to global oil markets from the sudden removal of Iranian crude.

Three of those waivers, for Greece, Italy and Taiwan, are no longer needed because they have all halted their imports of Iranian oil.

But the other five countries involved continue to import Iranian oil and had lobbied for their waivers to be extended.

Nato ally, Turkey, has made perhaps the most public case for an extension, with senior officials telling their US counterparts that Iranian oil is critical to meeting their country’s energy needs.

They have also made the case that as a neighbour of Iran, Turkey cannot be expected to completely close its economy to Iranian goods.

Turkish Foreign Minister Mevlut Cavusoglu has said the move "will not serve regional peace and stability."

In a message posted on Twitter on Monday, Cavusoglu said: "Turkey rejects unilateral sanctions and impositions on how to conduct relations with neighbours."

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Mr Cavusoglu added the decision would harm the people of Iran.

He tagged the US State Department and Mr Pompeo in his tweet.

Mevlut Cavusoglu has hit out at the decision made by the White House. Credit: AP

In a statement carried by the official IRNA news agency on Monday, Iran's Foreign Ministry said: "Regarding the illegal status of the sanctions, the Islamic Republic of Iran basically has not seen and does not see any worth and validity for the waivers."

It says Iran has intensified consultations with neighboring countries, as well as "European and international partners," on the sanctions.

The ministry says a "necessary decision" will be announced later, without elaborating.

China, one of Iran’s largest customers, slammed the step, calling it more evidence of US “unilateral sanctions and long-arm jurisdiction”.

The country relies on imports for about half of its oil and could present the toughest diplomatic challenge for the US in trying to enforce its sanctions.

However, the arguments fell on deaf ears within the Trump administration.

“We will no longer grant any exemptions,” Mr Pompeo said.

“We are going to zero, we’re going to zero across the board.”

Left unclear, however, is whether the five countries will face immediate American sanctions if they continue to take delivery of Iranian oil after the waivers expire.

Two senior US officials – Special Representative for Iran Brian Hook and Assistant Secretary of State for Energy Resources Francis Fannon – refused to comment on whether any of them would be given additional time to complete purchases made prior to May 2, or allowed to use money already set aside for purchases after that date without penalty.

Both said questions about such provisions were “hypothetical”, suggesting some accommodation may be possible.

Mr Fannon said the US did not expect any sharp spike in oil prices or any significant reduction in the global supply of oil, given production increases by other countries, including the US itself, Saudi Arabia and the United Arab Emirates.

Assistant Secretary of State for Energy Resources Francis Fannon says they aren't expecting a sharp spike in oil prices. Credit: AP

Those comments were echoed by Kevin Hassett, chairman of the Council of Economic Advisers, although benchmark US crude oil rose 2.4% on Monday after the decision was announced.

Mr Hassett told reporters at the White House he is not concerned that the decision will negatively affect oil prices.

He said US production has risen in recent years by “more than all of Iranian production” so there is adequate capacity should there be a need for oil supplies.

He said the link between oil prices and the US economy has diminished as American oil production has increased.

“If the oil price goes up or down $10 a barrel now it doesn’t have that much of an effect… because our output has increased so much,” Mr Hassett said.

Senator Ted Cruz, who had long lobbied for the step, applauded the end of oil waivers.

Senator Ted Cruz backs the decision. Credit: AP

“This decision will deprive the ayatollahs of billions of dollars that they would have spent undermining the security of the United States and our allies, building up Iran’s nuclear and ballistic missile programs and financing global terrorism,” he said.

Israel’s Prime Minister Benjamin Netanyahu, meanwhile, praised the administration for further tightening sanctions enforcement on Iran, which the Jewish state regards as an existential threat.

He said the move “is of great importance for increasing pressure on the Iranian terrorist regime”.

Saudi Arabian Energy Minister Khalid Al-Falih said in a statement that his country would work with other oil producers “to ensure adequate supplies are available to consumers while ensuring the global oil market does not go out of balance”.