US to exempt China, India, Japan from Iran oil sanctions

Washington: The United States will exempt China, India and Japan from oil sanctions on Iran, Secretary of State Mike Pompeo said Monday, while vowing to be "relentless" in pressuring Tehran.

Hours after sweeping sanctions were reimposed following the US withdrawal from a denuclearization deal, Pompeo said eight countries would be at least temporarily exempt from the ban on buying Iranian oil due to special circumstances or so as not to disrupt energy markets.

The countries with the waivers will be China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey, Pompeo said.

"Our objective is to starve the Iranian regime of the funds it uses to fund violent activity throughout the Middle East and around the world. Our ultimate goal is to encourage them to abandon their revolutionary course," Pompeo told reporters.

A notable omission was Iraq. Had Iraq been granted a waiver, Iran might have been able to skirt sanctions by mixing its crude with its neighbor´s output, analysts say.

President Donald Trump withdrew in May from the deal that his predecessor Barack Obama had reached with Iran, calling it a failure because it addressed only the clerical regime´s nuclear program.

Pompeo reiterated demands for Iran to make a "180-degree turn" from its regional policies rooted in the 1979 Islamic revolution, such as support for the Lebanese militia Hezbollah. "We hope a new agreement with Iran is possible, but until Iran makes changes in the 12 ways I listed in May, we will be relentless in exerting pressure on the regime," Pompeo said.

Pompeo said the eight countries exempted have "already demonstrated reduction of Iranian crude over the past six months and, indeed, two of those eight have already completely ended imports of Iranian crude and will not resume as long as the sanctions remain in place."

"We continue negotiations to get all of the nations to zero," he said. Pompeo also said without specifying that the United States would exempt three non-proliferation projects underway in Iran from the sanctions.

European powers have strongly disagreed with Trump´s decision, pointing out that Iran is abiding by the nuclear agreement, and have looked to create ways to allow its businesses to keep up commerce with the country.

The measures are the most concrete result yet of US President Donald Trump´s controversial decision in May to abandon the multi-nation nuclear deal with Tehran. They will directly affect companies from third countries doing business with Iran. They could upset world oil markets, though the US has granted temporary waivers to eight jurisdictions to continue importing Iranian oil.

World oil markets were on alert, nervously set to gauge the consequences of the sanctions. "All eyes will be on Iranian exports, whether there will be some cheating around US sanctions, and on how quickly production will fall," said Riccardo Fabiani, an analyst for Energy Aspects.

Oil is Iran´s main source of income. But the sword has two edges: Iran is also the OPEC cartel´s third-largest producer. The US stance has already inflicted serious pain on Iranians, with the country´s currency, the rial, losing more than two thirds of its value since May.

Iranian oil exports have fallen by about a million barrels a day in that time, though India and China have continued to purchase it. Most Europeans, as well as Japan and South Korea, have stopped.

European Union has established a mechanism to permit its multinational companies to maintain presences in Iran, but all signs are that the US sanctions will be dissuasive. Both Airbus and Total have announced plans to leave Iran.

A first set of sanctions announced August 7 prompted European automakers Daimler and PSA to quit Iran. To continue exporting crude oil, Iranian tankers in recent weeks have been turning off their transponders to avoid detection. But satellites have continued to track them.