Iranian Affairs

Eagle1

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France’s Macron calls for Iran nuke deal to be saved
AP
Reuters
May 09, 2019
  • EU concerned over Iran rhetoric, but spokesman suggests Islamic Republic committed
  • France's President Macron says Iran must remain committed to the deal
Iran wants to bring its nuclear deal with world powers “back on track” after the US unilateral withdrawal, the spokesman of the Atomic Energy Organization of Iran said on Thursday, a day after Tehran said it was scaling back curbs to its nuclear program.

“Our goal is to strengthen the JCPOA (the acronym for the nuclear agreement) and bring it back on track,” Behrouz Kamalvandi was quoted as saying by IRNA.

His comments came a day after concerns were raised that Iran was about to default on at least parts of the nuclear deal.

French President Emmanuel Macron later said the Iran nuclear deal must be saved and that the accord’s signatories should do all they can to ensure that the Islamic Republic respects it.

Macron told reporters on Thursday that “Iran must remain in this agreement and we must do everything we can to ensure that it stays in.”

Speaking ahead of an EU summit in Romania, Macron lauded the 2015 deal curbing Iran’s nuclear ambitions as “a good agreement."

But he said it should be completed with other pacts governing Iran’s missile development and its potentially destabilizing role in the Middle East.

Amid heated rhetoric from Tehran and Washington in recent days, Macron urged the signatories not to “get caught up in any escalation” and to “jointly watch over our collective security.”

Meanwhile the European Union on Thursday urged Iran to respect the international agreement curbing the Islamic Republic’s nuclear ambitions, saying it aims to continue trading with the country despite US sanctions.

The EU and major European powers — Britain, France and Germany — also said that they “note with great concern the statement made by Iran concerning its commitments” to the nuclear deal.

The joint statement came as the bloc struggles to preserve the 2015 nuclear deal with Iran, a day after a new deadline from Tehran on finding a solution to make up for last year’s unilateral US withdrawal from the accord and re-imposed US sanctions on Iran.

“We remain fully committed to the preservation and full implementation” of the deal, endorsed by the UN Security Council, said the EU statement.

The Trump administration pulled America out of the 2015 deal a year ago, saying it does nothing to stop Iran from developing missiles or destabilizing the Middle East. The Europeans insist that the pact is an important pillar of regional and global security and was never meant to address those other issues.

Iranian President Hassan Rouhani said in a televised address Wednesday that signatories to the deal now have 60 days to come up with a plan to shield his country — already laboring under economic hardship — from the sanctions imposed by President Donald Trump.

The EU powers say they “regret the re-imposition of sanctions” by the US and remain “determined to continue pursuing efforts to enable the continuation of legitimate trade with Iran.”

The Europeans have set up a complicated barter-type system to skirt direct financial transactions with Iran and so evade possible US sanctions. The workaround, dubbed INSTEX, is not yet operational as Iran has not completed its part of the scheme.

The bloc said it plans to push ahead with "the operationalization of the special purpose vehicle 'INSTEX'."

The EU has also introduced a so-called “blocking statute” protecting European companies from the effects of US sanctions, but many international corporations do more business in the United States than in Iran and have already severed ties there rather than risk running afoul of Washington.
In a message implicitly directed at the US administration, the EU powers said “we call on countries not party to the (deal) to refrain from taking any actions that impede the remaining parties’ ability to fully perform their commitments.”

Despite the heated rhetoric, the Europeans insist that only the International Atomic Energy Agency can judge whether Iran remains in compliance with the nuclear agreement. More than a dozen reports have shown that Tehran is respecting it so far. A new report is due at the end of May.

 

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U.S CENTCOM Cheif General Kenneth McKenzie: "It sends a clear and unmistakable message to the Iranian regime, that any attack on US interests will be met with unrelenting force... If a fight is to be had, we'll be fully prepared to respond, and defend our interests. And it won't be a fair fight."

 

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Iran Supreme National Security Council: Iran suspended some commitment in JCPOA (Iran nuclear deal) and gives 60 days to EU before further Action




 

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Iran Foreign Minister Javad Zarif: failure of EU INSTEX will led to Iran exiting NPT

Leaving NPT one of Iran's numerous options: FM Zarif

 

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EU, 3 nations reject Iran demands over nuclear deal, U.S. sanctions
By Nicholas Sakelaris
MAY 9, 2019

An Iranian newspaper depicts Iranian President Hassan Rouhani and U.S. President Donald Trump on its April 8 front page. File Photo by Abedin Taherkenareh/EPA-EFE


May 9 (UPI) -- The European Union, Britain, France and Germany on Thursday rejected an ultimatum from Iran that gave the nations two months to protect Tehran from U.S. sanctions.

The ultimatum was given Wednesday by Iranian President Hassan Rouhani, who blasted the United States for withdrawing from the 2015 nuclear deal. After the Trump administration abandoned the agreement, it reimposed sanctions against Iranian exports, most significantly oil.

In his remarks Wednesday, Rouhani said the other parties to the agreement -- the EU and the governments of Britain, Germany, France and China -- have 60 days to implement promises to protect Iranian oil exports and banking sectors. Tehran said it will end compliance with two key parts of the deal if the EU doesn't resume trade with Iran, which would defy U.S. sanctions.

Thursday, the EU's high representative and foreign ministers of France, Germany and Britain rejected the demand but said they're still committed to the agreement, which lifted Iranian sanctions in exchange for Tehran's promise not to develop nuclear weapons.

"We reject any ultimatums and will assess Iran's compliance on the basis of Iran's performance regarding its nuclear-related commitments under the [nuclear deal] and the [Nonproliferation of Weapons Treaty]," the parties said in a joint statement.

"We regret the re-imposition of sanctions by the United States following their withdrawal."
Rouhani's demand is part of an effort to get other nations to begin buying Iran crude oil again, which is barred by U.S. sanctions.

"The path we have chosen today is not the path of war, it is the path of diplomacy," Rouhani said. "But diplomacy with a new language and a new logic."

The EU said it will continue "legitimate trade" with Iran.

The International Atomic Energy Agency, which sends inspectors into Iran, will publish its next report in August to ensure Iran's compliance.

The Trump administration reimposed tough sanctions on Iran last year after leaving the Obama-era pact. Last fall, they expanded to include Iran crude oil exports to most countries. U.S. officials tightened sanctions again this monthwhen U.S. President Donald Trump ended waivers for a few countries that had been excepted from the sanctions.

 

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US Sanctions Hit Two of Iran's Top Non-Energy Exports
May 08, 2019
Michael Lipin
FILE - In this photo taken May 31, 2012, a furnace of the Mobarakeh Steel Complex is seen, 280 miles (460 kilometers) south of Tehran.

FILE - In this photo taken May 31, 2012, a furnace of the Mobarakeh Steel Complex is seen, 280 miles (460 kilometers) south of Tehran.

This article originated in VOA’s Persian service. Farhad Pouladi contributed from Washington.


New U.S. sanctions targeting Iranian industrial metals will hit two of the country's most lucrative non-energy exports, according to Iranian government data seen by VOA Persian.

President Donald Trump signed an executive order Wednesday, seeking to deny Iran revenue from its exports of iron, steel, aluminum and copper. The measure blocks the assets of people involved in producing those metals inside Iran. It also authorizes sanctions against foreign financial institutions that sell goods and services to Iran to help it produce or export those metals.

An Iranian government trade report for the Persian year that ended March 20 shows iron, cast iron and steel were the nation’s fourth-biggest non-energy export, earning $3.8 billion. The report, published online by Iran’s Trade Promotion Organization, says iron, cast iron and steel accounted for 8% of Iran’s exports, excluding oil and gas, for the year. The $3.8 billion marked a 12% increase from the previous Persian year, the report also showed.

The same report also showed copper and copper products were Iran’s 10th-biggest non-energy export in the last Persian year, drawing $699 million in revenue, a 217% increase from the year before. That revenue accounted for 1.6% of Iran’s non-energy exports for the year.

Aluminum did not feature in the Iranian trade report’s list of the top 10 non-energy exports for the last Persian year.

Other nations 'on notice'
In his statement, Trump said Iranian exports of industrial metals accounted for 10% of its export economy. “Today’s action … puts other nations on notice that allowing Iranian steel and other metals into your ports will no longer be tolerated,” he said.

Washington has widened sanctions against Iran repeatedly over the past year, calling it part of a campaign to impose maximum pressure on Tehran to change perceived malign behavior.

Iranian Deputy Foreign Minister Sayyed Abbas Mousavi denounced the new U.S. sanctions, in remarks published by state media Thursday. "This measure of the United States is in violation of international obligations and it will be [held] responsible," Mousavi said. Iran has vowed to defy U.S. sanctions and rely on its own resources to sustain its economy.

Behnam Ben Taleblu, an Iran analyst at the Washington-based Foundation for Defense of Democracies (FDD), said Iran's industrial metals industry is one of several that U.S. officials can sanction in order to dry up revenues of the Islamic Revolutionary Guard Corps, the most powerful Iranian military branch, which Trump designated as a terrorist organization last month.

"Petrochemicals, in my view, is one [such industry], while metallurgy is another that contributes to Iran's [ballistic] missile efforts," Taleblu told VOA Persian at an FDD event Wednesday.

In a Thursday interview with VOA Persian, Patrick Clawson, research director for the Washington Institute for Near East Policy, said the new U.S. sanctions also would hurt Iran's labor market.

"They hit [economic] sectors that employ quite a few people in Iran and [that make] products used in metal industries such as the automobile industry," Clawson said. "So there are quite a few workers who could lose their jobs as a result of difficulties in these industries."

Iron
New York-based investment bank Jefferies said Iran's exports of iron ore were likely to collapse. "We had expected Iranian exports to increase to 20 million tonnes this year as a result of … supply issues [at a Brazilian iron ore mine operated by Vale SA]," Jefferies said in a Thursday note sent to news outlets. "Now, Iranian iron ore exports are likely to approach zero for as long as these sanctions last."

A Thursday report by Britain's Financial Times said the U.S. sanctions were likely to "further tighten" global supplies of iron ore, a key steelmaking ingredient, and drive its price up to $100 a tonne for the first time since May 2014. It said the commodity was currently trading at $95 a tonne.

In another report published Thursday, London-based commodity markets news service Argus said Iran exports 96% of its iron ore output, sending the vast majority of it, 94%, to China. It said another 2% of Iran's iron ore output is exported to India, Turkey, Egypt and Gulf Co-operation Council
member states.

Steel
A U.S. Commerce Department report published in March said Iran exported 9.24 million tons of steel in 2018, a 24% increase by volume from the year before. It said Iran was the world's 18th-largest steel exporter in 2017, selling the metal to 120 countries and territories.

The Associated Press, in a Thursday report from Tehran, said Iran has dozens of mainly government-owned steel mills that employ about 50,000 workers. It said those mills have an annual output of 25 million tonnes of steel, with less than one-third of it being used for the domestic market to produce consumer goods and provide parts for offshore oil rigs, military vehicles and car manufacturing plants.

Copper
U.S. news agency Bloomberg published a Wednesday report citing Bloomberg Intelligence analyst Andrew Cosgrove as saying Iran's copper exports in 2018 amounted to 138,000 tonnes.

Aluminum
Texas-based research company Harbor Aluminum, in an email to VOA Persian, said Iran’s main customers for aluminum exports from 2013 to 2018 were Turkey, India, Taiwan, South Korea and China. It said the volume of Iran’s aluminum exports had fluctuated between 100,000 to 200,000 tonnes a year.

 

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China, India Seen as Europe's Last Hope to Save Iran Deal
May 09, 2019
Reuters
FILE - A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Persian Gulf, Iran, July 25, 2005.

FILE - A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Persian Gulf, Iran, July 25, 2005.

BRUSSELS/PARIS/BERLIN —
The European Union will defend the Iran nuclear accord despite Tehran's decision to backtrack on its commitments in response to U.S. sanctions, diplomats believe, but European powers expect it to collapse without a deal to sell Iranian oil to China or India.

Britain, France and Germany, which signed the 2015 deal along with the United States, China and Russia, are determined to show they can compensate for last year's U.S. withdrawal from the accord, protect trade and still prevent Tehran from developing a nuclear bomb.

But with Iran's economy dependent on crude exports that are traded in U.S. dollars, a promised European trade channel to bypass American sanctions has proved complicated, is not yet operational, and may never be able to handle oil sales.

"This situation now risks deteriorating, but it will be step by step and not a collapse all in one go," said a senior European diplomat. A French diplomat talked of a "negative spiral" in which trade in food and medicines was simply not enough, while another European envoy spoke of Iran's "phased exit" from the deal.

The Iran accord, one of the West's biggest foreign policy achievements until U.S. President Donald Trump pulled out in May 2018, lifted punishing United Nations' sanctions on Iran in return for Iranian compliance with the deal.

Iran has met its terms but Trump withdrew because he believes the accord did not curtail Tehran's ballistic missile program or address Iranian involvement in Syria's civil war, something Europeans argue the 2015 deal was not designed to do.

By reimposing punitive sanctions, the United States says it aims to dramatically weaken Iran's clerical rulers and force Tehran to renegotiate a broader arms control deal.

The European Union says that can still be done without tearing up the nuclear accord, which put strict limits on Iranian enrichment.

Iranian President Hassan Rouhani warned on Wednesday that Tehran could resume enrichment at a higher grade if the European powers, China and Russia did not do more to circumvent U.S. sanctions on banking and energy to boost trade.

Food, medicine not enough
European diplomats and officials reject any ultimatum and some believe they still have time to save the deal. One senior EU official said it is too early to consider European sanctions that can snap back in case of Iranian non-compliance.

"Iran's announcements are not a violation or a withdrawal of the nuclear deal," the senior EU official said. "It is for the International Atomic Energy Agency to assess Iran's compliance ... if Iran breaches the agreement, then we would react.”

Others are more pessimistic.

Once Europe's biggest supplier, Iran has seen its exports gradually cut off from European buyers by sanctions, starting last November and then on May 2, when Washington removed the last waivers to Italy and Greece. China, India and Turkey are also among those who lost their waivers this month.

EU officials estimate Iran needs to sell about 1.5 million barrels a day to keep its economy afloat, but sales risk falling below 1 million a day, bringing hardship and potentially economic crisis to Iranians.

The EU's special trade channel, known as INSTEX, was proposed by Russia as a barter system for Iranian oil in exchange for European goods, but it may not be operating before the end of June and its capability is limited.

"Instex isn't the solution because it will only serve food and medicine needs, not oil," a second European diplomat said.
"Anyway, the structure is not completed.”

China to the rescue?
Led by a German banker, INSTEX relies on Iran to set up a so-called mirror company that must meet international anti-fraud requirements. Officials and diplomats say progress is slow.

Draft laws are still pending, while a lack of transparency in Iran's financial system is also a problem. The U.S. decision to sanction Iran's Revolutionary Guard (IRGC), which controls part of Iran's economy, is another complication.

"As a partner to Iran, those who use INSTEX have to be extremely vigilant that at the other end of the operation it doesn't benefit entities linked to the IRGC," the European diplomat said.

Europe's plan B is for China or India to buy Iranian oil.

China, which increased imports of Iranian crude in April, says it opposes unilateral U.S. sanctions against Iran and will defend the rights of its companies. Foreign ministry spokesman Geng Shuang said the Iran deal should be fully and effectively implemented, although it was not clear what China would do to support it.

India, Iran’s biggest oil client after China, has by contrast almost halved its Iran oil purchase since November. So far, Indian officials have said they will seek oil from other suppliers.

'Europe's impotence'
EU officials say Delhi has expressed interest in joining INSTEX to buy Iran's oil, but discussions have barely begun, and questions remain about whether this is even feasible.

"It shows Europe's impotence that they are pushing China and India to do what they can't," said Sanam Vakil, a senior research fellow with the Middle East North Africa Programme at Chatham House.

"I'm not sure the Europeans are thinking in a big way about what to do. It's very clear there are no meaningful economic options they can offer Iran," she said.

EU foreign policy chief Federica Mogherini met Chinese State Counselor Wang Yi on the margins of a China-EU summit in Brussels in April and discussed whether China could buy Iranian oil, three EU officials said.

China can still do that but would risk U.S. sanctions.

Beijing has also held talks with Washington over the issue, the officials said, but it was not clear how far they had progressed.

"The Iranians say the Europeans must do more, but what about the Chinese and the Russians? They have not done much. The Chinese have dragged their feet in several areas because of U.S. sanctions," a third European diplomat said.

Vakil said the three European powers should focus on high-level diplomacy to kick-start negotiations between the deal's remaining stakeholders and Washington to preserve the accord.

"It will (die) without a mandated effort on behalf of the E3 to keep the deal alive," she said.

 

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EU Leaders Say Escalation Must Be Avoided In Iran Crisis; Trump ‘Open To Talk’ To Iran
May 09, 2019
French President Emmanuel Macron (left) and German Chancellor Angela Merkel in Sibiu, Romania, on May 9

French President Emmanuel Macron (left) and German Chancellor Angela Merkel in Sibiu, Romania, on May 9

French President Emmanuel Macron and German Chancellor Angela Merkel have cautioned against an escalation in the dispute over Iran’s nuclear deal after Tehran said it would stop abiding by parts of the deal and U.S. President Donald Trump said he was open to talks with Iranian leaders.

Tehran on May 8 said it had stopped observing limits on its nuclear activities agreed under the 2015 deal until they find a way to bypass renewed U.S. sanctions. The same day, the U.S. envoy for Iran, Brian Hook, accused Tehran of resorting to "nuclear blackmail."

Macron, speaking in Romania ahead of an EU summit on May 9, told reporters that "Iran must remain in this agreement, and we must do everything we can to ensure that it stays in."

He urged the agreement's signatories not to "get caught up in any escalation" and to "jointly watch over our collective security."
For her part, Merkel said the EU wants to avoid an escalation, adding that Tehran must recognize that it is in its own interests to remain committed to the nuclear deal.

"Our hand remains outstretched at this point; we want to continue to push for a diplomatic solution," Merkel said after the EU meeting.

Trump did not address Iran’s latest move. But he told reporters at the White House that he wants the Iranian leadership to contact him.
"What I would like to see with Iran, I would like to see them call me," Trump said.

Amid rising tensions between the two countries, Trump said Washington was not looking for a conflict with Tehran.

"I want them to be strong and great, to have a great economy," Trump said, adding that "we can make a fair deal."

Macron said the landmark 2015 deal curbing Iran's nuclear ambitions is "a good agreement" but added that it should be completed with other pacts governing Iran's missile development and its potentially destabilizing role in the Middle East.

His statement came shortly after the European Union and three European powers issued a joint declaration urging Iran to respect the deal.

The EU's foreign policy chief, Federica Mogherini, and the foreign ministers of Britain, France, and Germany said they still backed the accord but rejected "ultimatums" from Tehran to keep it alive.

"We reject any ultimatums and we will assess Iran's compliance on the basis of Iran's performance regarding its nuclear-related commitments" under the agreement, the European statement said.

Iran has said its move was in response to the sweeping unilateral sanctions that Washington has reimposed since it quit the agreement one year ago. The reimposing of sanctions has dealt a severe blow to Iran's economy.

The EU powers say they "regret the reimposition of sanctions" by the U.S. and remain "determined to continue pursuing efforts to enable the continuation of legitimate trade with Iran."

They were "determined to continue pursuing efforts to enable the continuation of legitimate trade with Iran" in an effort to keep the deal afloat, the statement added.

But it said that Iran must at the same time "implement its commitments under the 2015 Joint Comprehensive Plan of Action (JCPoA) in full as it has done until now and to refrain from any escalatory steps."

With reporting by Rikard Jozwiak, AFP, AP, Reuters, and dpa

 

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U.S. Warns Iran While Urging Leaders To Sit Down For Talks
May 09, 2019
U.S. Secretary of State Mike Pompeo has warned Tehran of a swift and decisive response to any provocations.

U.S. Secretary of State Mike Pompeo has warned Tehran of a "swift and decisive" response to any provocations.

The United States appears to be taking a carrot-and-stick approach to Tehran, threatening “swift and decisive” response to any Iranian attack, while at the same time urging the country’s leaders to sit down for talks.

Secretary of State Mike Pompeo on May 9 said in a statement that “our restraint to this point should not be mistaken by Iran for a lack of resolve."

"The regime in Tehran should understand that any attacks by them or their proxies of any identity against U.S. interests or citizens will be answered with a swift and decisive U.S. response," Pompeo said.

"We do not seek war," he said.
"But Iran's 40 years of killing American soldiers, attacking American facilities, and taking American hostages is a constant reminder that we must defend ourselves," said Pompeo, in a reference to the 1979 Islamic Revolution during which U.S. diplomats were taken captive.

Pompeo’s comments came after President Donald Trump asked Iranian leaders to “call me.”

"What I would like to see with Iran, I would like to see them call me," Trump told reporters at the White House.

Still, the president said he could not rule out a military confrontation given the tense environment.

"I guess you could say that always, right? I don't want to say no, but hopefully that won't happen," he said.

Tensions have been building on several fronts between Washington and Tehran.

The United States on May 8 tightened the screws further on Iran with sanctions on its metals industry on the day Tehran said it was suspending some of its commitments under the 2015 nuclear deal with world powers.

Washington had already moved to restrict Iran’s oil exports, the country's largest source of hard currency.

The U.S. military has also sent an aircraft carrier battle group to the waters near Iran, and Pompeo on May 7 paid an unannounced visit to Baghdad, where he met with Iraqi officials to discuss U.S. security concerns amid what he called “escalating” Iranian activity.

The moves come around the May 8 one-year anniversary of Trump's decision to withdraw the United States from the landmark 2015 nuclear accord, which was aimed at curbing Iran's nuclear program in return for relief from sanctions.

Tehran did not immediately respond to the latest remarks by Pompeo and Trump.

But it earlier said that it would no longer sell its surplus enriched uranium and heavy water to other nations as stipulated in the nuclear agreement. It also threatened to enrich its uranium stockpile closer to weapons-grade levels in 60 days if world powers fail to negotiate new terms.

In Washington, the special assistant to the U.S. president and senior director for weapons of mass destruction, Tim Morrison, said Iran’s announcement was "nothing less than nuclear blackmail of Europe."

Britain, France, Germany, and the European Union on May 9 reiterated that they remain committed to the nuclear deal but also warned that they would "reject any ultimatums" by Tehran regarding the terms of the accord.

"Iran must remain in this agreement and we must all work to make sure it remains," French President Emmanuel Macron said.

"We must not get jumpy or fall into escalation," Macron said. "That's why France is staying in [the deal], and will stay in, and I profoundly hope Iran will stay in."

When Trump withdrew from the deal, he said it was “fatally flawed” because it did not address Iran’s ballistic-missile program or Tehran’s alleged state sponsorship of terrorism, which it denies.

Britain, France, and Germany have attempted to keep the deal alive, but they have also expressed concerns about Tehran's continued testing of ballistic missiles. China and Russia also signed the accord and have vowed to remain part of the deal.

With reporting by AFP, dpa, and Reuters


 

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'Ghost' Tankers, Bartering, and Middlemen: Iran's Playbook For Selling Oil In The Face Of U.S. Sanctions
May 07, 2019
By Frud Bezhan


The United States has pledged to cut Iran's oil exports to "zero," denying Tehran a key source of revenue through tough sanctions and the threat of stiff penalties to potential buyers.

But economists say that while the U.S. measures will hit Iranian oil sales, which account for 70 percent of the country's revenues, they will not completely halt them.

Iran can skirt U.S. sanctions and still sell oil through different avenues, say analysts, who predict that Tehran's petroleum exports will not fall more than 30 percent from current levels.

Ahead of May 8, the first anniversary of U.S. President Donald Trump's decision to withdraw from a controversial 2015 nuclear deal with Tehran, an Iranian official said the country would circumvent renewed sanctions by selling oil on the "gray market."

Under the 2015 deal between Iran and world powers, Tehran was to curb its nuclear program in exchange for relief from international sanctions. The United States reimposed crippling economic sanctions on Tehran months after pulling out of the agreement, dealing a major blow to Iran's crisis-hit economy. Last month, Washington ended waivers for major importers of Iranian oil.

Even if Iran can sidestep U.S. sanctions, it is unclear if buyers want to risk huge penalties to buy its oil, say analysts.

'Off The Grid'
One tactic previously employed by Iran to bypass U.S. sanctions and sell its oil is through the use of "ghost" tankers.

Iran has hidden the destination of its oil sales by strategically switching off oil tankers' AIS signal, an automatic tracking system. This has made it difficult to pinpoint the origin, route, and the date a tanker is loaded and unloaded.

Other tactics used by Iran at sea include ship-to-ship oil transfers and discharging and loading oil at remote ports. Tehran has also been known to reflag its tankers and use documents from other countries to mask their ships' origins.

Iran was exporting around 2.5 million barrels of oil a day in April 2018, the month before Trump withdrew the United States from the nuclear deal. Since U.S. sanctions on Iran’s oil industry were reinstated in November, Iranian oil exports have decreased by more than half to around 1.1 million barrels per day (bpd).

Scott Lucas, an Iran expert at Birmingham University in Britain and the editor of the EA World View website, says some industry experts estimate that Iran is exporting up to 400,000 barrels of oil per day above officially acknowledged levels through methods such as turning off transponders on tankers. Lucas says industry experts predict that U.S. sanctions will further decrease Iran's current official oil exports by up to 20 or 30 percent.

"The U.S. aim is not an embargo with action to intercept and stop tankers," says Lucas. "Instead, Washington will aim at the financial networks supporting transactions."

Scott adds that these "off-the-grid movements" may give some relief from tightening U.S. sanctions, but they increase the risk of Tehran being seen as the "culprit rather than the victim in this showdown."

Iran has the support of the other signatories of the nuclear deal -- Russia, China, France, Britain, and Germany -- which have criticized Washington for unilaterally pulling out of the deal and reimposing sanctions, despite multiple reports by the International Atomic Energy Agency (IAEA) that Tehran was complying with the agreement.

Ditch The Dollar
U.S. sanctions prevent Iran -- and those who want to do business with them -- from dealing in U.S. dollars, the global reserve currency, and from using SWIFT, the U.S.-dominated global-transaction network. Oil is also priced and traded in U.S. dollars.

"You can use your own currency," he told reporters in New York in September, saying countries were making deals with Tehran to use their own currencies in bilateral trade. "Sell stuff in your own currency, buy stuff in the other country's currency, and at the end of a specific period, balance it out in a non-dollar currency. It's quite possible. And may even be profitable."

Iran has used this tactic before when it was under sanctions, dealing in euros and the Chinese yuan.

But Scott says deals in currencies like the yuan or the Indian rupee are "not attractive because the currencies are nonconvertible or are limited in the international financial system."

Oil For Goods
Tehran can also reach barter deals with countries.

Russia has said it would buy at least 100,000 barrels a day of Iranian oil. Moscow has offered to pay for the oil with Russian machinery and food, according to Russia's Oil Ministry. Moscow has also pledged to invest in the Iranian oil sector as Western companies draw back.

In 2017, Russia implemented an oil-for-goods program with cash-strapped Iran, with Moscow buying Iranian oil in exchange for Russian goods, including oil pumps and pipes, gas-drilling equipment, metal and wood products, leather, and wheat. The two countries have been working on oil-for-goods deals worth up to $20 billion.

Many buyers of Iranian oil are vulnerable to U.S. sanctions because they use the U.S. banking system. But Russia and China are less vulnerable because their economies and financial systems are less connected to the United States than Western countries.

Iran has previously had barter deals with China and India. At the time, Iranian critics of government policies maintained that bartering partners were selling useless merchandise to Iran.

"Whenever there are excessive regulations or sanctions, black markets spontaneously emerge as a way out from under the regulations and sanctions," says Steve Hanke, an economist at Johns Hopkins University in Baltimore. "So, for a sanctioned seller, there is a way out. But it comes at a price: lower profits from sales."

Going Private
Iran also has the option of selling oil through the Iran Energy Exchange (IRENEX), a rial-based, domestic oil exchange.

Selling oil is in the hands of the state, but to skirt U.S. sanctions the government last year began to sell to private buyers through IRENEX.

On April 30, Iran offered 1 million barrels of oil on IRENEX to attract new, private buyers.

Naysan Rafati, an Iran analyst at the International Crisis Group, says the exchange keeps the details of the buyers private because they might be targeted by U.S. penalties.

But the domestic energy exchange has not proven to be successful. Fars news agency reported on April 30 that only 70,000 barrels were sold at $60 a barrel, lower than the price on world markets.

Naysan says that, fundamentally, Iran must grapple with the question of demand.

"We will have to see what appetite, if any, those companies doing the buying have for possible penalties by a U.S. administration that's clearly made this a key policy objective," he says.


 

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India gives in to US pressure, fully stops import of Iran oil
Indian decision comes amid pressure from the Trump administration, which had called on India and 7 other countries to stop the import of Iranian crude.
by Nayanima Basu and Mahua Venkatesh
9 May, 2019


Although Iran is a key ally for India, it has reduced oil imports significantly over the past few years. | Ali Mohammadi/Bloomberg

New Delhi: India has completely stopped the import of oil from Iran under pressure from the US, multiple sources have told ThePrint. New Delhi is, however, negotiating with Washington to allow it to procure pending shipments for which contracts have already been signed with Iran.

India’s decision is in adherence with a directive from the Trump administration, which called for New Delhi to end to all its import of crude and petroleum products from Tehran.

India and seven other countries that rely on Iran for their energy needs were granted a six-month waiver by the US last November after Washington walked out of the nuclear deal and imposed multiple sanctions on the Rouhani regime, particularly over crude exports that are the mainstay of the Iranian economy.

The deadline for the so-called waiver, also called the Significant Reduction Exemption (SRE), expired on 2 May, according to official sources.

“We have some slack for shipments on the high seas or where contracts were already concluded for offtake, so we are negotiating with the US to at least allow those to go through,” said an official who is involved in the talks and spoke on condition of anonymity.

The official said the discussions are going on with the US government but nothing positive has yet come out of the talks.

According to another official from the Ministry of Petroleum and Natural Gas, however, India is hopeful that the existing contracts and orders that were already placed with Iran will not be halted.

While Iran, which continues to rely on oil sales to run its economy, has been under sanctions for several years, India has always found a way to manoeuvre around them. This, however, is the first time that India has completely stopped procuring oil from the country, sources added.

Oil on the way
Sources said that at present, two vessels loaded in April with 4 million barrels of crude from Iran are expected to reach India this month. Of these, one is expected to reach the Paradip port in Odisha and the other Kochi in Kerala.

The official from the Ministry of Petroleum and Natural Gas added that India had been taking steps to reduce its imports from Iran since the US walked out of the Iran nuclear deal, the Joint Comprehensive Plan of Action (JCPOA).

New Delhi has considerably reduced its oil imports from Iran over the last six months.

India has been Iran’s second largest customer after China. New Delhi imports 80 per cent of its crude oil requirements and Iran accounts for 13 per cent of these imports, according to the oil ministry.

But between January and April this year, crude imports from Iran have gone down by over 40 per cent. In April, India’s imports from Iran dropped by 57 per cent compared to the corresponding month in the previous year, according to data by the Directorate General of Commercial Intelligence and Statistics (DGCIS).

Consumption, however, is rising. In 2018-19, India’s total oil consumption was 211.6 million metric tonnes compared to 206.2 MMT in the previous year — an increase of 2.7 per cent, according to official data.

US to ‘make up’ for Iran
While the Modi government has downplayed the adverse impact of its decision of not procuring oil from Iran, sources said this will impact supplies going forward.

Sources added that the US is taking all steps to make up for the supply shortage that India may face due to the absence of Iranian oil. The US is now pushing India to increase its purchase of shale oil.

This was among the main agenda for which Alice Wells, US principal deputy assistant secretary of state for South and Central Asia, visited India last month before the waiver expired. Washington is presently also undertaking measures to keep the international prices of crude under control.

India, meanwhile, is also looking at Saudi Arabia and UAE to come to its rescue.

There appears to be some positive news on that front. “We have always assured India that UAE is ready to cover any shortfall in its oil imports,” UAE Ambassador to India, Ahmed Al Banna, told ThePrint. “We have stood beside them in the past as well when there were embargos on Iran. We are working with our Indian partners closely.”

According to oil ministry data, Iraq is the top supplier of crude to India followed by Saudi Arabia. Iran remains the third largest supplier of oil despite a reduction in inbound shipment. Besides these three, UAE and Venezuela have also supplied a large chunk of India’s crude requirements.

Sources said an increased amount of imports are likely from Saudi Arabia from June. But the quantum has not been decided yet as all these issues will be clearer once a new government takes charge.

 
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