US to Exempt China, India, Japan from Iran Oil Sanctions: Pompeo

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.

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'Crucial Period' for Oil as Iran Exports Shrink: IEA

Global oil output hit a record of 100 million barrels per day in August, but the market may tighten and prices rise as exports from Iran and Venezuela decline, the International Energy Agency said Thursday.

"We are entering a very crucial period for the oil market," the IEA said in its latest monthly report. "Things are tightening up."

The global record came as output from the Organization of the Petroleum Exporting Countries rose to a nine-month high of over 32 million barrels per day (mb/d).

The cartel had agreed in Vienna in June to push up production in order to put a cap on soaring prices.

In recent months, prices have wavered comfortably between the USD 70 and USD 80 per barrel on the Brent crude futures contract.

According to the IEA, a rebound in Libyan production, near-record Iraqi output and higher supply from Nigeria and OPEC kingpin Saudi Arabia have so far managed to offset the impact of shrinking production from crisis-hit Venezuela and Iran.

But with the crisis in Venezuela showing no sign of abating, and with new US sanctions on Iran's oil industry set to come into force on November 4, other producers may have to ramp up production even further if they want to limit the impact on the market.

"It remains to be seen if other producers decide to increase their production. The price range for Brent of USD 70-80/bbl in place since April could be tested," the IEA said.

In May, US President Donald Trump pulled the US out of the 2015 nuclear deal with Iran and said other countries must stop buying oil from Tehran or face American sanctions.

And hundreds of thousands of Venezuelans have fled their country since the nation became engulfed in a political crisis that has sent the economy into free fall.

"The situation in Venezuela could deteriorate even faster, strife could return to Libya and the 53 days to 4 November will reveal more decisions taken by countries and companies with respect to Iranian oil purchases," the IEA said.

Iran Sanctions Loom

Output from OPEC member Iran in August hit its lowest level since July 2016, the IEA said, "as more buyers distanced themselves from Tehran ahead of looming US sanctions", the report said.

Top buyers China and India have already cut back purchases from Tehran, and other countries are likely to do the same between now and November.

"While Iranian exports have fallen by nearly 500,000 barrels per day since May, shipments from Iraq and Saudi Arabia have risen by 200,000 barrels per day and 60,000 barrels per day respectively," the IEA added.

In Venezuela too, production dipped in August to 1.24 million barrels a day, and should it continue to decline, may hit 1 million barrels a day at the end of 2018.

OPEC, of which Venezuela is a member, had already warned that the country's output was at a three-decade low.

"If Venezuelan and Iranian exports do continue to fall, markets could tighten and oil prices could rise without offsetting production increases from elsewhere," the IEA warned.

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