Uncertainty over US waivers for buyers of Iranian oil is starting to grip the market again, under very different circumstances than when American sanctions were set to go into effect last year.
Before existing exemptions were granted in early November, Saudi Arabia was pumping at record levels, benchmark Brent futures rose to a four-year high, traders were predicting $100 oil, and President Donald Trump was seeking lower fuel prices ahead of US mid-term elections. The waivers blindsided the market, which had assumed America would bring Iranian exports to zero, and sparked a 40% collapse in crude.
Now, as the six-month waivers allowing buyers to ship limited quantities approach their expiry, the Saudis are pursuing aggressive output cuts, US sanctions on Venezuela have further squeezed supplies and Opec producers burned by last quarter’s oil slump are defying Trump’s call for lower prices.
Iran’s customers, meanwhile, are making plans – with some betting the exemptions will be extended and others expecting an end.
The Trump administration, for its part, says the aim is still to completely halt Iran’s oil shipments as it seeks to increase economic pressure on Tehran. In February, Japanese broadcaster NHK cited the State Department’s Brian Hook as saying the US doesn’t plan to extend the waivers.
More recently, Secretary of State Mike Pompeo said America wants to bring the Islamic Republic’s exports to zero “as quickly as market conditions will permit.”
Based on current oil supply and the potential of the US and Saudis to ramp up production, “going to zero” could happen this year without compromising affordable crude supplies, according to four officials who spoke on condition of anonymity to discuss internal deliberations. The officials emphasized that the discussions are still underway and no final decision has been made.
Industry consultant Energy Aspects Ltd expects prices to be a key determinant for America’s decision on waivers. At current levels, the waivers are likely to be renewed for China, India, Japan, South Korea and Turkey with a 30% to 50% cut in permitted volumes compared to existing limits, according to EA’s February 28 note. If prices move higher, waiver volumes could only be cut by 20% to 30%.
Iran’s customers, meanwhile, are making plans – with some assuming the concessions will be renewed while others foreseeing some reductions to permitted purchases.


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