Iran: U.S. oil export sanctions waivers to end

3 min
Manfred Stamer
Manfred Stamer Senior Economist for Emerging Europe and the Middle East

The U.S. administration announced this week that waivers granted to China, India, Japan, South Korea and Turkey to import Iranian oil despite U.S. sanctions will not be extended beyond 2 May. Despite strong criticism from China, India and Turkey, the countries are likely to comply with the sanctions, at least partly: China as long as trade negotiations with the U.S. continue, and India will not risk a diplomatic breakdown with the U.S. As a result, Iranian oil exports are expected to fall from an estimated 1.9mn bbl/day (one third of which has been “secret”) to the range of 0.4-0.6 bbl/day – not to zero as some trade in local currency and barter trade will continue. Real GDP is now forecast to contract by around -5% in fiscal year 2019. Meanwhile, the oil price has hit a 2019 high of 74.5 USD/bbl, suggesting that markets doubt that Saudi Arabia and the UAE will fully compensate for the loss of Iranian exports as the U.S. has indicated.