The United States on November 5, 2018 temporarily exempted eight countries, including India from the US sanctions for buying Iranian oil.
Addressing a press conference in Washington, US Secretary of State Mike Pompeo announced the list of the countries temporarily exempted from the sanctions. The countries include India, China, Japan, Italy, Greece, South Korea, Taiwan and Turkey. Pompeo said that these countries showed a significant reduction in oil purchase from the Persian Gulf country after the Trump administration reimposed sanctions on Tehran.
At the same time, Pompeo warned companies globally that they would be subject to severe penalties including potential sanctions if they continued to have commercial transactions with Iran. Asserting that the US wants Iran to change its behaviour, Pompeo said that at the center of it is an unprecedented campaign of economic pressure.
The announcement comes as the US imposed the toughest ever sanctions on Iran on November 5, 2018. The sanctions were announced against more than 700 individuals, entities, aircraft and vessels, as part of its largest ever single-day action targeting Iran. They cover Iran’s banking and energy sectors and reinstate penalties for countries and companies in Europe, Asia and other continents that do not halt Iranian oil imports. Over 300 of those sanctions are new targets.
While the US had previously wanted countries including India to completely halt oil purchases from Iran by November 4, it seems to have relented considering all the repercussions of the move on oil prices globally.
The main objective of the United States is to starve the Iranian regime of the revenue it uses to fund violent and destabilising activities throughout the Middle East and around the world.
- Two among the exempted eight nations have already completely ended imports of Iranian crude and will not resume as long as the US sanctions regime remains in place.
- The US is looking to continue negotiations to get all of the nations to bring down their crude imports from Iran to zero.
- Over 20 importing nations have already zeroed out their imports of crude oil, taking more than 1 million barrels of crude per day off the market.
- The Iranian regime, since May till date, has lost over USD 2.5 billion in oil revenue.
- Besides this, 100 per cent of the revenue Iran receives from the sale of oil will be held in foreign accounts.
- Iran would only be able to use the money for humanitarian trade or bilateral non-sanctioned goods.
Impact of sanctions on India
- India is the world’s third-biggest oil consumer and it meets more than 80 per cent of its oil needs through imports.
- Iran is India’s third-largest supplier after Iraq and Saudi Arabia and meets about 10 per cent of total needs. Currently, India pays Iran in Euros using European banking channels.
- India had previously resisted US’s call to reduce crude oil imports from Iran to zero, citing the increasing energy needs of its 1.3 billion population.
- However, at the same time, India has taken steps to reduce its oil purchase from Iran, which has already declined substantially.
- In May 2018, US President Donald Trump pulled the US out of the 2015 landmark Joint Comprehensive Plan of Action (JCPOA) terming it as disastrous”.
- Under the Obama-era deal, which involved five permanent members of the UN Security Council and Germany, Iran had agreed to stop its nuclear programme in exchange for relief from economic sanctions.
- After the US’ withdrawal from the deal, Trump signed fresh sanctions against Iran, which claims its nuclear programme is peaceful and for civilian purpose.
- The US, however, decided to grant narrow and temporary waivers to permit the continuation of three non-proliferation projects currently underway. The nation though warned that Iran will never come close to getting a nuclear weapon on President Trump’s watch.