WASHINGTON (Dispatches) -- The Trump administration said it won’t renew waivers that let countries buy Iranian oil without facing U.S. sanctions, a move that roiled energy markets and risked upsetting major importers such as China and India.
"This decision is intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue,” White House Press Secretary Sarah Sanders said in a statement Monday.
"The U.S., Saudi Arabia and the United Arab Emirates, three of the world’s great energy producers, along with our friends and allies, are committed to ensuring that global oil markets remain adequately supplied,” according to the statement.
Iran will close the Strait of Hormuz, a waterway vital for global oil shipments, if the country is prevented from using it, a senior military official said in what appeared to be a response to the U.S. plan to end waivers on Iranian oil exports.
"If we are prevented from using it, we will close it,” the state-run Fars news agency reported, citing Alireza Tangsiri, head of the Islamic Revolution Guards Corps (IRGC)’s navy force. "In the event of any threats, we will not have the slightest hesitation to protect and defend Iran’s waterway.”
The Strait of Hormuz is a narrow waterway carrying a fifth of the world’s traded oil that Iranian officials have vowed to block in retaliation for sanctions targeting the country’s nuclear program.
Brent for June settlement climbed 2.6 percent to $73.87 on the London-based ICE Futures Europe exchange as of 9:52 a.m. in New York. The global benchmark price rose as high as $74.31 earlier in the session, its highest intraday level in almost six months.
The current set of waivers -- issued to China, Greece, India, Italy, Japan, South Korea, Taiwan and Turkey -- expires May 2.
President Donald Trump said in a tweet that "Saudi Arabia and others in OPEC will more than make up the Oil Flow difference in our now Full Sanctions on Iranian Oil. ”
Saudi Energy Minister Khalid al-Falih said in a statement Monday that the kingdom will coordinate with other oil producers to ensure adequate supplies are available to consumers while ensuring the global oil market "does not go out of balance.”
Secretary of State Michael Pompeo said the U.S., Saudi Arabia and the UAE are "working directly with Iran’s former customers.” He told reporters that "we will no longer grant any exemptions -- we’re going to zero” and any nation continuing to buy Iranian oil will face U.S. sanctions.
Iranian Foreign Ministry Spokesman Abbas Moussavi said Tehran gives no value and credit to U.S. sanctions waivers, but it is in touch with European partners, neighbors and others to counter any adverse consequences of sanctions.
The decision not to renew the waivers is a victory for National Security Adviser John Bolton and his allies who had argued that U.S. promises to get tough on Iran were meaningless with waivers still in place. Pompeo and his team had been more cautious, though they also maintained that the market was well-enough supplied to ramp up pressure on Iran.
Trump’s efforts to cut Iranian supplies have rocked oil markets in the past year.
China, the largest buyer of Iranian crude, reiterated its opposition to unilateral sanctions on Monday and accused the U.S. of reaching beyond its jurisdiction. "China’s cooperation with Iran is open, transparent, reasonable and legitimate, and should be respected,” Foreign Ministry spokesman Geng Shuang said in response to a question on the waivers at a regular briefing in Beijing.
Japan and South Korea, two of the U.S.’s closest allies and long-time buyers of Iranian oil, said they were aware of the reports about the waivers but didn’t confirm the decision. Japan’s chief cabinet secretary, Yoshihide Suga, said Monday in Tokyo that the government had kept in close contact with the U.S. and expressed the view that "there should be no damage to the activities of Japanese companies.”
An Indian foreign ministry spokesman declined to comment when reached by phone Monday.
Pompeo Privately Said:
Trump Will Avoid Military Confrontation With Iran
WASHINGTON (Dispatches) -- Secretary of State Mike Pompeo reportedly told a group of Iranian American community leaders the U.S. is not seeking a regime change in Iran through direct military intervention.
Pompeo met with 15 leaders last Monday at the Renaissance Dallas Hotel, according to Axios, citing three sources who were in the room, one of whom took detailed notes. During the meeting, Pompeo reportedly was asked, "If regime change does not occur internally what is the endgame?"
In response, according to the site, Pompeo responded that the administration is "careful not to use the language of regime change” and that the Trump administration does not plan to intervene militarily in Iran. When asked if the administration had considered the possibility of a coup, Pompeo quipped that he would not tell the attendees even if it had, prompting laughter, according to the article.
Beyond ruling out military intervention, Pompeo was vague about the administration’s plans regarding Iran.
He reportedly said that "our best interest is a non-revolutionary set of leaders leading Iran,” according to notes viewed by Axios, and that the Trump administration would have handled the 2009 "Green Movement,” differently from the Obama administration, but he did not detail how.
Pompeo also reportedly told the group that "there are no guarantees” U.S. sanctions would not hurt the people of Iran.
The secretary of State was also reportedly grilled about Trump associates’ connections to the MKO, which was designated a terrorist organization by the U.S. until 2012. Several attendees asked Pompeo about the relationship between national security adviser John Bolton and Trump’s personal lawyer Rudy Giuliani and MEK, according to Axios.
"Ambassador Bolton spoke at an MEK rally. President Trump and I have not,” Pompeo responded, according to notes viewed by Axios.
Reuters: U.S. Backtracks on IRGC Designation
The United States has largely carved out exceptions so that foreign governments, firms and NGOs do not automatically face U.S. sanctions for dealing with Iran’s Islamic Revolution Guards Corps (IRGC) after the group’s designation by Washington as a foreign terrorist group, according to three current and three former U.S. officials cited by Reuters.
The exemptions, granted by Pompeo and described by a State Department spokesman in response to questions from Reuters, mean officials from countries such as Iraq who may have dealings with the IRGC would not necessarily be denied U.S. visas.
The exceptions to U.S. sanctions would also permit foreign executives who do business in Iran, where the IRGC is a major economic force, as well as humanitarian groups working in regions such as northern Syria, Iraq and Yemen, to do so without fear they will automatically trigger U.S. laws on dealing with a foreign terrorist group.
American officials have long said they fear the designation could endanger U.S. forces in places such as Syria or Iraq, where they may operate in close proximity to IRGC-allied groups.
The State Department’s Near Eastern and South and Central Asian bureaus, wrote a rare joint memo to Pompeo before the designation expressing concerns about its potential impact, but were overruled, two U.S. officials said on condition of anonymity.
The action was also taken over the objections of the Defense and Homeland Security Departments, a congressional aide said.
"Simply engaging in conversations with IRGC officials generally does not constitute terrorist activity,” the State Department spokesman said when asked what repercussions U.S.-allied countries could face if they had contact with the IRGC.