South Korea and India agreed with the US on the outline of deals that would allow it to keep importing some Iranian oil after it asked the United States for “maximum flexibility” this week, according to Asian officials.
No final decision has been made and an announcement is unlikely before US sanctions on Iran are re-imposed Nov. 5, the officials said, asking not to be identified because the information is confidential. That opens the possibility that the terms could still be modified or the deals scrapped entirely.
The waivers would ensure at least some Iranian oil continues to flow to the global market, potentially calming fears of a supply crunch and further suppressing international oil prices just before mid-term elections in the US Brent crude has fallen 14 percent from over $85 a barrel last month on signs that other OPEC producers will pump more to offset any supply gap, according to Bloomberg.
Almost all buyers have been negotiating with the US for waivers. That was after the US President Donald Trump in May withdrew from a nuclear agreement with Tehran hammered out by his predecessor, Barack Obama, and said he would re-impose economic curbs lifted under that 2015 accord.
India’s payments for the Iranian oil will go into a local escrow account, which can be used for barter trade with the Middle East producer, one of the people said.
A waiver would allow companies to buy limited volumes of Iranian oil without running the risk of being shut out of the US financial system. In India, it would provide some relief by allowing the purchase of relatively cheap crude as the government faces protests over higher fuel costs before national elections next year.
And for South Korea, a US exemption would mean a resumption in imports of the Persian Gulf state’s South Pars condensate, a type of ultra-light oil that is particularly critical for the Asian nation because many of its plants are geared to process it.