Iran Accuses US of Using Oil Sanctions to Gain Market Clout

Iran's oil minister has accused the United States of using sanctions to "shock" the global oil supply and gain market clout for its booming shale oil production.

Washington abandoned a landmark 2015 nuclear deal between Tehran and world powers last year and reimposed sanctions on the Islamic republic's crucial oil sales as well as other parts of the economy.

"I think one of the reasons for sanctions against Iran and Venezuela is opening up the market for American oil sales," Oil Minister Bijan Namdar Zanganeh said in an interview with state TV late Sunday, a transcript of which was provided by his ministry's SHANA news agency.

“This much oil production needs a market and could not be compensated for with regular OPEC cuts, therefore America needed to shock the market to find a place for itself. Some sanctions are (imposed) so that Americans can keep producing and developing shale oil," he added.

New technology that allows for extracting oil and gas from shale rock formations has led to a boom in oil production in the US in recent years.

Zanganeh said that according to US figures, shale oil's breakeven cost can be as low as $40 per barrel.

Benchmark Brent crude was trading at around $64 dollars a barrel in London on Monday.

The US is currently the world's biggest oil producer followed by Russia and Saudi Arabia, and is set to become a net exporter from 2021, according to the International Energy Agency.

The White House said in April that tightening sanctions on Iran will have "no material impact" on oil prices given the large supply of US oil on the global market.

OPEC, pressured by US output, abundant global crude supplies and weak oil demand growth, agreed last week to extend by nine months daily oil output cuts first announced in December aimed at supporting prices and soaking up excess supplies.

Iran, whose production has been severely hit by US sanctions, is exempt from the cuts agreement along with crisis-stricken Venezuela and Libya.

Battling what he called "the most severe organized sanctions in history," Zanganeh last week vowed to keep selling oil via "unconventional means.“

Iran's state TV recently aired a program showing an Iranian-flagged tanker under US sanctions that delivered one million barrels of crude oil to China, one of the remaining partners to the nuclear deal and which has rejected Washington's efforts to cut Tehran's oil exports to zero.

Photo: IRNA

Iran's Rouhani Threatens to Cut Off Persian Gulf Oil

Iran's President Hassan Rouhani struck a defiant stance against US sanctions on Tuesday, renewing his threat to cut off international oil sales from the Persian Gulf. 

“America should know... it is not capable of preventing the export of Iran's oil," Rouhani said at a televised rally in Semnan province.

"If it ever tries to do so... no oil will be exported from the Persian Gulf," he added. since the 1980s, Iran has said repeatedly it would blockade the Gulf in response to international pressure but has never carried out the threat. 

Washington has reimposed sanctions, including an oil embargo, since withdrawing from a landmark 2015 nuclear deal between Tehran and major powers in May.  

It has vowed to reduce Iran's oil sales to zero, but has granted temporary waivers to eight countries.

Rouhani last threatened to close the Gulf in July when he warned the US "should not play with the lion's tail."

The president downplayed the economic impact of sanctions, accusing the media of exaggerating the country's problems.

"No hyperinflation, no massive unemployment will threaten us. People should stop saying such things in the papers," he told the crowd. 

The latest inflation report from Iran's central bank says food prices rose 56 percent year-on-year in October. 

Rouhani acknowledged there were "some problems", but said these would be addressed in the new budget plan to be presented on December 16. 

He said the government would maintain subsidies on essential goods and increase public sector wages and pensions by 20 percent.

Photo Credit: IRNA

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.

Photo Credit: Deposit Photos

Iran Tankers Go Dark to Keep Selling Oil

Working from their small offices in Stockholm, analysts at a new watchdog that monitors global oil shipments have been run ragged by Iran's efforts to skirt US sanctions this month.

In late October, every single one of Iran's vessels "went dark", switching off their transponders to avoid international tracking systems—a first since TankerTrackers.com began operating in 2016.

The ships can now only be tracked manually using satellite imagery.

"It's the first time I've seen a blanket black-out. It's very unique," co-founder Samir Madani told AFP. 

It is part of efforts by Iran and its customers to keep oil flowing ahead of a new US embargo set to hit on Monday. 

"Iran has around 30 vessels in the Gulf area, so the past 10 days have been very tricky, but it hasn't slowed us down. We are keeping watch visually," added co-founder Lisa Ward.

Huge improvements in commercially available satellite imagery in recent years have allowed firms like TankerTrackers to watch the progress of vessels on a daily basis, where once images would have come only once a week or more.

Iran hopes less transparency will allow it to keep selling oil after November 5 when the United States reimposes the last set of sanctions lifted under the 2015 nuclear deal, which Washington abandoned in May. 

But Joel Hancock, from analysis firm Natixis, said this did not mean their sales would necessarily remain high. 

"The main issue with tanker trackers is they are tracking exports, maybe not sales," he told AFP, adding that the ships could just be moving oil to storage facilities in China or elsewhere. 

Another method—used during the last sanctions period between 2010 and 2015—is to keep oil on huge tankers off the Gulf Coast. 

TankerTrackers says there are currently six vessels, with a total of 11 million barrels of capacity, parked offshore as floating storage containers—freeing up port capacity and allowing for quick deliveries.

'Dead in the Water'

Although precise figures are rarely available in the notoriously opaque oil market, most analysts say Iran's exports dropped from around 2.5 million barrels per day in April to roughly 1.6 million in October.

Countries with close security and trade ties with the US were quick to cut their purchases—South Korea went almost straight to zero, with Japan and much of Europe close behind. 

Although the European Union has vowed to create a "special purpose vehicle" (SPV) to protect companies buying oil, analysts see little chance that firms will risk US penalties by using it. 

"The SPV is currently dead in the water. It can't handle oil in any serious volume," said Henry Rome, a specialist on Iran sanctions for the Washington-based Eurasia Group consultancy. 

The US granted waivers to eight countries but only on condition they make substantial cuts to their purchases.

But the trickiest customers for the US in its "maximum pressure" campaign are the biggest buyers, India and China.

China, the largest buyer of Iranian oil, has been surprisingly willing to play ball with sanctions so far, in part because it has bigger fish to fry in the form of its ongoing trade war with Washington. 

During the last sanctions period, China funneled almost all its Iranian transactions through the Bank of Kunlun, controlled by Chinese state energy group CNPC, which was sanctioned by the US in 2012 but shielded the rest of the sector from penalties. 

"Kunlun was a sacrificial lamb in the past... but Chinese banks appear to have realised the immense risk and are a lot more cautious," said Rome. 

Unconfirmed reports suggested this month that the Bank of Kunlun was quietly halting transactions with Iran. 

But China is likely to seek new paths to keep the oil flowing, according to Rome.

"It looks like they'll open another channel, maybe another bank, and keep importing sizable amounts, but there's still a lot to work out," he said.

India, another major buyer, will also be looking for mechanisms as they did during the last sanctions period. 

"The difference last time was that sanctions were phased in gradually over a long period," said Rome.

"There's a certain panic this time that they are being required to make very substantial reductions immediately, and also that banking systems are much more intertwined than in the past." 

Even if Iran can continue to sneak oil out of its ports, it will find it difficult to get the cash into its accounts. 

“Iran is a formidable adversary, well practiced in different techniques to keep selling oil and muddle the data, but that won't be a panacea for everything," said Rome. 

Photo Credit: Depositphotos

US Eyes Limited Waivers for Iran Crude Buyers

The US administration likely will enable some countries to continue importing oil from Iran in the short term, despite Washington's maximum pressure campaign against Tehran, White House national security adviser John Bolton said today.

"We understand, obviously, that a number of countries, some immediately surrounding Iran, and others that have been purchasing oil, may not be able to go all the way to zero," Bolton said at a forum hosted by the Washington-based Alexander Hamilton Society. "We want to achieve maximum pressure, but we do not want to harm friends and allies either. We are working our way through that."

The sanctions statutes that President Donald Trump re-activated in May require the administration to assess by 4 November, and every 180 days after that date, whether buyers of Iranian crude are "significantly reducing" their purchases. The administration can then sanction financial institutions in countries that it deems have not cut their purchases adequately and grant exemptions to countries that do.

The State Department is expected to provide such exemptions before the full brunt of US sanctions pressure begins on 5 November, even though the scope of waivers is yet undetermined.

China, India and Turkey were among the largest buyers of Iranian crude before the US withdrew from the Iran nuclear deal. US sanctions explicitly exclude exports of natural gas from Iran to its neighbors, but lack of guidance from Washington has created uncertainty for natural gas importers in Turkey and Iraq.

Iranian oil exports have fallen faster and by a greater amount than initially expected, as refiners in Asia-Pacific and Europe curbed their purchases, despite opposition from some of their governments.

"You already see reduction in purchases in countries like China, that you would not have expected, countries that are still in the nuclear deal," Bolton said. "European businesses are fleeing the Iranian market. Most of the big ones are already out."

Argus estimates that Iranian crude loadings fell to 1.58mn b/d in September, down by 12pc since August. But these figures do not include vessels belonging to Iran's state-owned NITC, which have stopped transmitting GPS transponder signals. Iran's exports averaged 2.5mn b/d in January-May.

Trump's decision to reimpose sanctions on Iran has contributed to higher oil prices globally, an analysis by the US Energy Information Administration (EIA) shows. But Bolton today downplayed the effect on oil markets.

"One of the things this administration has done that (former president Barack Obama's) administration did not do was to encourage producers to alter their production to make up for the lost output in Iran," Bolton said. "It has been an interesting exercise, but we have been able in some cases to find alternative purchases for the buyers of Iranian oil," he said, without providing details.

Russia and Saudi Arabia increased production since June. Opec and its non-Opec allies will produce as much as necessary to meet global demand and offset any supply disruptions, Saudi oil minister Khalid al-Falih says.

Growing US output and a lower oil import bill have enabled the administration to implement stricter restrictions than were imposed between June 2012 and January 2016 under Obama. These factors also influenced the layout of sanctions in the run-up to 5 November.

"It is important to remember the context in which the Obama administration negotiated (sanctions exemptions) in 2012," given oil prices above USD 100/bl amid a presidential re-election campaign, said Richard Goldberg, a former congressional aide who helped craft Iran sanctions legislation.

"Their strategy was to announce exemptions early to show that the US was willing to provide exemptions and demonstrate that other countries are reducing purchases from Iran," said Goldberg, a senior fellow at the Washington-based advocacy group Foundation for Defense of Democracies, which backs the administration's Iran policy.

By contrast, Trump's administration—partly as a negotiating tool—has kept the scope of waivers unclear, even as the sanctions deadline approaches. It also has yet to clarify the scope of possible financial sanctions and to explicitly exclude condensate from US sanctions.

"Ultimately the Iranians are evaluating what is going to happen on 5 November, how sanctions will be enforced" and what concessions on financial sanctions the EU has managed to extract from Washington, Goldberg said.

Forcing Iranian exports to zero remains the primary objective, Bolton said. "The president said unmistakably our goal is maximum pressure. There has to be a fundamental change in the behavior of the Iranian regime."

Photo Credit: IRNA

Iran Sells Oil on Exchange in Bid to Counter Sanctions

Iran sold oil to private buyers through its energy exchange for the first time on Sunday, as part of its efforts to counter the imminent return of US sanctions. 

Only 280,000 barrels were sold out of one million offered, and went for USD 74.85 per barrel, more than USD 4 below the initial asking price.

The identity of the buyer remained a secret, with the conservative Fars news agency saying only that a conglomerate of private firms had made the purchase through three brokerages.

The US is set to reimpose sanctions on Iran's oil industry on November 5, following President Donald Trump's decision to walk out of the 2015 nuclear deal in May. 

The plan to sell oil to private companies on the energy exchange was floated back in July by first vice-president Eshaq Jahangiri with the aim of "defeating America's efforts ... to stop Iran's oil exports."

The government hopes selling to private buyers, rather than direct to foreign clients, will make it harder for the US to monitor and stop its sales. 

"With the imminent return of a new wave of sanctions, the government is determined to utilise the maneuvering ability of the private sector to sell Iran's oil and find new markets," Hamidreza Salehi, director of Iran's energy exports federation, told semi-official news agency ILNA.

Some estimates show Iran's crude exports have already dropped by a third since May when it was selling around 2.5 million barrels per day.

The government currently intends to offer oil on the energy exchange once a week, according to Fars. 

Its initial base price on Sunday was USD 79.16, but it received limited bids as much as USD 16 lower as trading began, the exchange's website showed.

The final buyer only emerged after the base price was dropped to USD 74.85 in the closing hours.

The head of Iran's securities and exchange organization, Shapour Mohammadi, promised on Friday that the identity of the buyer would not be revealed.

Photo Credit:IRNA

EIA Lifts Brent Forecast on Iran Sanctions Worries

This article has been republished with permission from Argus Media.

The US Energy Information Administration (EIA) is raising its Brent crude price forecast by USD 5/bl to USD 81/bl for the fourth quarter, citing uncertainty over the effects of US sanctions on Iran.

US will re-impose restrictions on Iran's oil exports on 5 November, but many buyers already have begun to wind down their purchases of Iranian crude.

Opec members in the third quarter increased output by an amount greater than declining exports from Iran and Venezuela, the EIA said today in its Short-Term Energy Outlook. But "recent price increases indicate that oil market participants have concerns about the ability of Saudi Arabia, other OPEC members, and Russia to continue to offset expected further production declines in Iran and Venezuela," the agency said.

The EIA data are among the factors the administration must consider as it decides on the scope of waivers from Iran sanctions in coming weeks.

Administration officials insist that Iran's forced exit from the market, partial or full, will not have a significant effect on global crude markets as Saudi Arabia and other Opec and non-Opec producers, as well as growth in US output, make up the gap. A rise in oil prices could hurt President Donald Trump's administration politically if Americans see a noticeable jump in what they pay for gasoline ahead of crucial midterm elections in November. Trump has taken to blaming Opec producers for the recent increase.

"The administration is learning the hard way that it is difficult to drive Iran's oil off the market and keep gasoline below USD 3/USG," consultancy Rapidan Energy Group president Bob McNally said. "We are kind of touching the stove and learning that Saudi Arabia really cannot or will not keep oil prices from rising."

The EIA estimated Opec spare capacity at 1.3mn b/d in September — its lowest level since December 2016 when global oil inventory levels were much higher.

But the agency also forecasts that global oil supply and demand will be nearly balanced in 2019, contributing to downward pressure on the oil price.

The administration's economic brain trust has sought to downplay the risks to pump prices.

White House chief economic adviser Larry Kudlow last week said—without any details—that internal government analysis shows US crude output growing to 15mn b/d in 2020. The EIA today estimated 2019 output at 11.76mn b/d. The agency's most optimistic scenario for oil production in 2020, published in February as part of its Annual Energy Outlook 2018, pegs it at 12.8mn b/d.

White House Council of Economic Advisers chairman Kevin Hassett said yesterday that global demand growth is the primary driver of higher oil prices, even though Iran sanctions have played a role as well. "When the global economy is strong, oil prices tend to increase, and those increases can be quite non-linear," Hassett said.

The IMF in its latest economic outlook released yesterday lowered global growth projections to 3.7pc/yr in 2018-19, citing negative effects from the US administration's trade wars with key partners.

"If the IMF revisions of the world growth forecasts are correct, that will put less pressure on the oil prices," Hassett said.

Trading firm executives speaking at the Oil and Money conference in London today agreed on the severity of the effect of US sanctions against Iran.

The administration sees such comments as validation of their approach, despite concerns about effects on US gasoline consumers.

"Iran is fighting for their lives. They have got riots in all their cities. It is blowing up. Their inflation, their economy is in tatters. And at some point, they will probably come and want to make a real deal, not the deal that they made," Trump said yesterday.

The IMF expects Iran's economy to contract by 1.5 percent in 2018 and another 3.6 percent in 2019 as US sanctions affect oil exports from that country.

The EIA, in a separate bimonthly report to Congress on the effects of sanctions on Iran, estimated global production of oil and products—excluding Iran—at 93.4mn b/d in August-September and consumption at 96.5mn b/d. The estimated 3.1mn b/d gap compares with a 4mn b/d shortfall estimated in the EIA's previous report based on June-July data. The estimate is a hypothetical snapshot of the market balance assuming Iran is completely shut out from the global supply-and-demand balance.

Photo Credit: IRNA

Iran Urges OPEC to Rebuff 'Threats' From Trump

Iran on Sunday called on its OPEC partners not to bow to "threats" from US President Donald Trump, as the oil cartel prepared to meet to discuss output levels.

"I hope the outcome of this meeting will not be affected by President Trump's threats," Oil Minister Bijan Namdar Zanganeh told SHANA, his ministry's news agency.

Ahead of Sunday's meeting in Algiers of the Organisation of Petroleum Exporting Countries, Trump tweeted that "the OPEC monopoly must get prices down now!" by raising output.

Middle East states "would not be safe for very long" without the United States, the president also wrote Thursday.

Zanganeh fired back, saying the claim that "America safeguards the security and survival of producing countries" was the "biggest insult to American allies in the region".

"OPEC is an organization independent of America and will hopefully stay so," he said.

However, the Algiers meeting of OPEC and non-OPEC ministers is expected to offer an increase in output to "offset Iran's production cut", said Zanganeh.

Output from Iran has hit its lowest level since July 2016, according to the International Energy Agency, as top buyers India and China distance themselves from Tehran.

Trump has called for OPEC members, primarily US ally Saudi Arabia, to raise production, and warned importers to stop buying oil from Iran or face American sanctions.

The US in May withdrew from the 2015 nuclear deal with Tehran and reimposed sanctions on the Iranian economy, with a US embargo due to hit Iran's oil industry on November 4.

Photo Credit: IRNA

Iran's Options to Face Down US Oil Sanctions

Iran faces a potentially crushing loss of oil exports when US sanctions return in November, but the impact could be blunted by its experience of working around embargoes.

When Iran faced its toughest international sanctions between 2012 and 2015, analysts say it found a number of creative solutions, from repainting and renaming ships to switching off their tracking devices.

Those tactics have continued.

"We find those tankers quite often, leaving and entering Iran in a covert fashion with their transponder turned off," said Samir Madani, co-founder of TankerTrackers.com, which monitors the oil trade.

"We spot them through satellites. I'd say several vessels a month," he told AFP.

Analysts expect such behavior to ramp up when US sanctions on Iran's oil industry return on November 5, following Washington's withdrawal from the nuclear deal in May.

US pressure has already caused a 24 percent drop in Iran's sales between May and August, according to Bloomberg.

The big surprise has been cuts by Asian buyers, which analysts expected to resist US pressure, notably a 35 percent drop by China and 49 percent by India, according to the Eurasia Group consultancy.

"We underestimated the degree to which New Delhi and Beijing would concede to Washington's demands," it said in a briefing note.

Eurasia Group said wider geopolitics are at play: India is looking to deepen strategic ties with the US, while China may wish to avoid a fresh spat when it is already embroiled in a bitter trade dispute with Washington. 

Iran was exporting 2.7 million barrels of oil per day in May, but that has already fallen to 2.1 million.

Overall, Eurasia Group predicts the country's sales will fall by a further 0.9 million barrels per day to 1.2 million by November.

That would mean a loss of some USD 2-2.5 billion a month, at current prices.

'Cat and Mouse'

But analysts say Washington's goal of reducing Iran's oil sales to zero is unrealistic.

Iran has the world's fourth-largest reserves, and many countries—particularly in Asia—rely on its supplies and have refineries designed for its particular flavor of heavy crude.

And Tehran has many tried and tested ways to keep oil flowing.

It has already increased price discounts since May, worth around USD 10-15 million a month to large importers like China and India compared with last year, said Wood Mackenzie, a consultancy.

"Buyers can pay in kind, trade in other currencies, or extend credit—even keep the money in an escrow account in Switzerland and wait until these sanctions are over. India had a deal like that last time," said Madani.

If Iran can get its oil to a friendly port, it could be blended with oil from elsewhere and resold, said Thijs Van de Graaf, assistant professor for international politics at the University of Ghent.

"Iran played a cat and mouse game last time... and will probably do so again," he told AFP.

It also has more aggressive options, with President Hassan Rouhani recently restating an old threat to block the vital Strait of Hormuz through which around a third of the world's seaborne oil passes every day.

Rouhani announced last week that Iran was moving its main oil terminal out of the Gulf to a port in the Oman Sea, so that its tankers would no longer need to pass through the strait, giving it more scope to disrupt supplies.

Pressure on Europe

Iran says it will not accept major drops in its oil sales, putting pressure particularly on Europe, which was buying more than a fifth of its oil, to resist US demands.

The EU strongly opposed Washington's decision to scrap the nuclear deal and has vowed to introduce a package of measures to protect trade with Iran.

But European firms are highly vulnerable to US sanctions.

Shipping, banking and insurance firms have already backed out of Iran and oil purchases are down by 35 percent.

"If we cannot continue (the previous) level of sales even after the European package has been implemented, then that is a red line for us," warned deputy foreign minister Abbas Araghchi on state television.

Supreme leader Ayatollah Ali Khamenei warned recently that Iran would "set aside" the nuclear deal if it was no longer receiving the economic benefits it promised.

One slight upside for Iran is that oil prices are already rising due to the squeeze caused by the looming US sanctions.

Some analysts predict prices could exceed USD 100 per barrel, from the current level of around USD 70.

The United States has pressured its ally Saudi Arabia to pump more oil to compensate for the loss of Iranian supplies.

"In theory, it is perfectly possible to have an increased price of oil that entirely compensates for the loss of exports. That's why the US-Saudi relationship is key here," said Van der Graaf.

Photo Credit: IRNA

Iran Offers Discount Oil to Asia

Iran is selling oil and gas at a discount to Asian customers as it prepares for the return of US sanctions, state news agency IRNA reported on Monday. 

The "informed source" in Iran's oil ministry did not give details of the discount, but sought to downplay the move as common industry practice. 

"Discount is part of the nature of the global markets being offered by all oil exporters," the source told IRNA. 

Bloomberg reported on Friday that the state-run National Iranian Oil Company was reducing official prices for September sales to Asia to their lowest level in 14 years, compared with Saudi crude. 

The United States will seek to block Iran's international oil sales from November 5, when the second phase of sanctions are reimposed as part of Washington's withdrawal from the 2015 nuclear deal. 

Several key buyers, including China and India, who account for roughly half of Iran's sales, have said they are not willing to make significant cuts to their energy purchases from Iran. 

But analysts predict Iran could still see its oil sales drop by around 700,000 barrels per day from their current level of around 2.3 million. 

Much will depend on the European Union, which has vowed to resist US sanctions on Iran, but whose companies and financial institutions are more vulnerable to US financial pressure than their Asian counterparts. 

French energy giant Total has already said it is pulling out of its multi-billion-dollar investment project in the South Pars oil field in southern Iran as a result of the renewed sanctions.

Photo Credit: IRNA

Turkey in US Talks to Avoid 'Negative Impact' From Iran Sanctions

Turkey on Friday hosted an American delegation for talks to address concerns about the potential negative impact on its economy of the looming reimposition of US sanctions against Iran.

US President Donald Trump decided in May to abandon the 2015 deal agreed with other world powers on Iran's nuclear program and reimpose nuclear-related sanctions against the Islamic Republic.

The sanctions, which will seek to bar foreign companies from doing business with Iran and block its oil sales abroad, have alarmed Turkey which has a strong trade relationship with its neighbor and imports Iranian crude.

"Our relevant authorities are carrying out necessary work for Turkey not to be negatively impacted by the upcoming sanctions," the Turkish foreign ministry said in a statement.

"Within this framework, we had discussions with the US delegation visiting Turkey," it said, without giving further details.

It added that "Iran is an important neighbor for Turkey, in view of both our bilateral economic and commercial relations as well as our energy imports."

Turkish officials have vowed to continue trading with Iran despite the sanctions, which the former economy minister Nihat Zeybekci in May described as an "opportunity".

Asking not to be named, a US official acknowledged that the sanctions were "a very important and potentially contentious issue between the two governments."

He said the delegation had come "to make clear what the implications of our sanction legislation are, so there are no misunderstandings and confusion."

"The earlier we have these high level talks..., the less likely we are to wander into new areas of disagreement out of ignorance," said the official.

Relations between Turkey and the US have already been strained after a Turkish banker who helped Iran evade US sanctions was convicted in the US in January. 

Mehmet Haka Atilla was convicted after well-connected Turkish-Iranian businessman Reza Zarrab, arrested in the US in 2016, became a government witness and admitted involvement in a multi-billion-dollar gold-for-oil scheme to subvert US economic sanctions against Iran.

During his testimony, Zarrab implicated President Recep Tayyip Erdogan and other officials in the scheme. In May, a Manhattan court sentenced Atilla to 32 months in jail.

Annual trade between Turkey and Iran is around USD 10 billion but Erdogan has expressed hope of raising it to USD 30 billion. Iran supplies Turkey with around one half of its crude oil imports and Iranian tourists are increasingly important for the Turkish market.

Photo Credit: IRNA

US Sticks to Goal of Cutting Iran Oil Exports to Zero

The United States remains determined to force Iran to change its behavior by cutting its oil exports to zero, the State Department said Monday, despite resistance from importing countries.

Brian Hook, the senior official leading negotiations with US allies on a new Iran strategy, said Washington is confident the world has enough spare oil capacity to replace Iranian crude.

And he confirmed that US secondary sanctions on firms dealing with Iran would "snap back" on August 6 for trade in cars and metals and on November 4 for oil and banking transactions.

This has been US policy since President Donald Trump pulled out of the Iran nuclear accord on May 8, but many foreign capitals have been demanding waivers to allow some trade to continue.

The US ultimatum has also contributed to upward pressure on world oil prices, although Trump believes he has persuaded Saudi Arabia to offset this by ramping up its own production.

"Our goal is to increase pressure on the Iranian regime by reducing to zero its revenue from crude oil sales," Hook, the State Department's director of policy and planning, told reporters.  

"Now, we are working to minimize disruptions to the global market, but we are confident that there is sufficient global spare oil production capacity. 

"Banking sanctions will also snap back on November 4, and we will be aggressively enforcing these provisions to lock up Iran's assets overseas and deny the Iranian regime access to its hard currency."

Although the European signatories to the Iran deal—Britain, France and Germany—lobbied hard for Trump to stay in the accord, their companies are likely to acquiesce to the renewed sanctions.

Western diplomats say few major firms would see enough profit in dealing with Iran to justify the risk of losing access to US trade and finance.

But other powers—including major Iran clients like India, China and Turkey—may not be so quick to bow to US demands. 

Hook said teams of US diplomats are deploying to explain and defend the policy, but warned: "We are not looking to grant licenses or waivers, because doing so would substantially reduce pressure on Iran.

"We are prepared to work with countries that are reducing their imports on a case-by-case basis," he added. "But as with our other sanctions, we are not looking to grant waivers or licenses."

Photo Credit: Wikicommons

China's ZTE Halts Share Trading Following Ban for Exports to Iran, North Korea

Chinese telecom giant ZTE halted trading of its shares in Hong Kong and Shenzhen Tuesday following a US ban on its purchase of sensitive technology, which drew a pledge by China to "safeguard" its companies if necessary.

Washington said ZTE had failed to follow through on pledges to punish staff responsible for illegal exports to Iran and North Korea.

But China's commerce ministry said the firm had created tens of thousands of American jobs.

The chairman of the Shenzhen-based firm, Yin Yimin, said ZTE had established a crisis team and was ready to "go to all lengths to face the crisis head-on."

"We are in a complicated international situation," Yin said in an open letter circulated online, warning that the company faces "twists and turns" abroad.

Following an investigation into the illegal sale of goods to Iran and North Korea, ZTE pleaded guilty in March 2017 to unlawful exports and was hit with USD 1.2 billion in fines, the largest criminal penalty in US history in an export control case.

But US Commerce Department investigators said it made additional false statements multiple times about having taken action against the employees responsible, when it had not.

In a statement on its website, the Chinese Ministry of Commerce said "China has always asked Chinese enterprises to abide by the host country's laws and policies and operate legally and properly in the process of overseas operation."

"ZTE has launched extensive trade and investment cooperation with hundreds of American businesses, and contributing tens of thousands of jobs to the United States," it added, saying that it was "ready to take necessary measures to safeguard the legitimate rights and interests of Chinese enterprises."

The five-year US government investigation into ZTE's actions was first revealed in March 2016.

From January 2010 to March 2016, the company shipped $32 million of US cellular network equipment to Iran, and made 283 shipments of cellphones to North Korea, with the full knowledge of the highest levels of management, officials said.

ZTE used third-party companies to hide the export of US components to the sanctioned countries, and then hid the information by "sanitizing databases" with information on the sales. 

The firm deleted emails of employees involved in the scrubbing of records, and required employees with information about the illegal exports to sign non-disclosure agreements.

It also covered up the fact that ZTE paid full bonuses to employees who had engaged in illegal conduct, and failed to issue letters of reprimand.

Britain's National Cyber Security Centre (NCSC) also advised British telecommunication companies about the "potential risks" of using ZTE equipment.

"NCSC assess that the national security risks arising from the use of ZTE equipment or services within the context of the existing UK telecommunications infrastructure cannot be mitigated," said Ian Levy, its technical director, in a statement.

But a NCSC spokesman told AFP that the advice was not compulsory and that, legally speaking, British operators still have the right to use such equipment.

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