Oil drops as US considers exemptions on Iran sanctions

Oil drops as US considers exemptions on Iran sanctions
Washington wants to reduce Iran's oil exports effectively to zero and has threatened sanctions against any country that buys from Tehran.
2 min read
08 October, 2018
US sanctions will target Iran's crude oil exports from 4 November [Getty]
Oil prices dropped on Monday after the US said it would consider waivers on sanctions on Iranian oil exports, potentially averting a global shortage.

President Donald Trump pulled the US out of the nuclear deal between Iran and world powers in May. A fresh round of sanctions, coming into effect on 4 November, aims to reduce Iran's oil exports effectively to zero and in turn threatening penalties against any country that continues to buy Iranian oil.

Prices dropped to $83 a barrel on Monday after the US signalled before the weekend it would consider exemptions to allow Iranian oil to flow to some extent.

The administration is "in the midst of an internal process" of considering exceptions called SRE waivers, or significant reduction exemptions, a government official, who spoke on the condition of anonymity, said on Friday.

Prices hit a four-year high last week on worries of a global strain on supplies as a result of the sanctions.

India, a big buyer of Iranian oil, said two companies have ordered barrels in November, Reuters reported on Monday.

"One way or another, it looks as though India is going to take some Iranian crude," said Olivier Jakob of Petromatrix, adding that the development was helping oil to "retrace some of the price surge we saw last week".

Iranian oil exports at their peak this year supplied nearly 3 percent of the world's daily consumption. Analysts expect sanctions to remove between 500,000 and 1 million barrels per day out of the globe's oil market. 

International companies including France's Total, Peugeot and Renault, and Germany's Siemens and Daimler, have suspended operations in Iran since Trump announced the US withdrawal from the nuclear deal five months ago, adding to Iran's economic woes and fueling strikes and protests from across the country and political spectrum.