The exception granted by Secretary of State Mike Pompeo to U.S. sanctions reimposed on Iran on Monday also will permit the construction of a railway line from Chabahar port to Afghanistan, and for shipments to the war-torn country of non-sanctionable goods, like food and medicines, the spokesman said.
The Chabahar Port is considered a gateway to golden opportunities for trade by India, Iran and Afghanistan with central Asian countries besides ramping up trade among the three countries after Pakistan denied transit access to India.
According to Refinitiv Eikon data, Iranian crude exports have fallen to 1 million bpd so far in November.
Oil prices slipped yesterday as concerns mounts that an economic slowdown may curb fuel demand growth overshadowed the reintroduction of sanctions on Iran.
Brian Hook, the special USA representative for Iran, said that as major insurers withdraw coverage from Iranian vessels, Iran will likely turn to domestic insurance companies that will not be able to cover losses for maritime accidents that could run into the billions of dollars. The United States has taken this arbitrary step after announcing withdrawal from the nuclear agreement with Iran in May this year. In hopes of mitigating the immediate economic hit, Iranian authorities have hinted that Tehran might have to sell its oil at a discount to entice buyers going forward. The other two signatories - Russian Federation and China - are firmly opposed to the sanctions.
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"Oil revenues might decline but (they) will still be enough to run the country", said an official involved in Iran's global commerce.
Additionally, concern about oversupply on Thursday was substantial enough for traders to ignore new trade data from China showing that the country's oil imports rose to an all-time high at 9.61 million bpd in October.
Fawad Razaqzada, market analyst at futures brokerage Forex.com, said he had become "quite bearish on oil prices" due to lower demand growth forecasts, higher supply and Iran sanctions waivers.
On the supply-side, oil is in ample availability despite the sanctions against Iran.
"Crude prices are rising". If the sanctions are meant to "convince the [Iranian] regime to abandon its current revolutionary course", as Pompeo said on Monday, such exceptions surely undercut that effort. "The US has given waiver to some countries including India".
The exemption for Chabahar comes as good news for India and Afghanistan, but undercuts the Trump administration's portrayal of the sanctions as the "toughest ever". Still, Iran demonstrated considerable resilience and ingenuity in coping with earlier worldwide sanctions, and there is little to suggest Tehran could not do this again.