On advance word of the coming announcement, the price of Brent crude, the global oil benchmark, rose as much as 3.3 percent to $74.31 a barrel on Monday, the highest intraday level in almost six months.
Trump’s efforts to cut Iranian supplies have rocked oil markets in the past year. After running up above $85 a barrel in anticipation of sanctions, oil plunged to near $50 in the last three months of 2018 as the administration unexpectedly granted the waivers.
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. Geng didn’t elaborate on how China would respond.
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. State-run Indian Oil Corp. -- the nation’s bigger refiner and top buyer of Iranian oil -- has been lining up alternative suppliers since last year to hedge against the loss of crude from Iran, according to a company official.
Trump withdrew from the 2015 nuclear deal between Iran and world powers almost a year ago and revived a range of sanctions against Iran and any countries doing business with the Islamic Republic. But he and his top advisers have been wary of disrupting energy markets and spurring a hike in U.S. pump prices. For that reason, they allowed waivers for Iran’s biggest buyers of crude, including China, India and Turkey.
One person familiar with the decision announced Monday said that some of the countries that had previously received waivers would be given a little more time to wind down purchases. The person described that not as a waiver but more as a brief grace period.
Bolton and officials in the Energy Department have argued that it’s time for the administration to make good on its desire to push Iran’s oil exports to zero. While Pompeo’s team, led by Iran special representative Brian Hook, cautioned that a sudden removal of Iranian crude from the market -- about 1.1 million barrels a day -- could fuel volatility and lead to a price spike.
“We certainly aren’t looking to grant any exceptions or waivers,” Hook said in an interview this month with Kevin Cirilli on Bloomberg Radio’s “Sound On.” Oil markets are better supplied this year than last, and that “puts us in a better position to accelerate the path to zero,” he said.
The administration had also faced growing pressure from Iran hawks in the Senate, including Ted Cruz of Texas and Tom Cotton of Arkansas, to cut waivers to zero.
The risk now is the decision could cause crude prices to spike just as Trump begins to gear up to campaign for a second term. His administration had been wary of doing anything that could push crude prices above $70 a barrel.
(With assistance from Jihye Lee, Isabel Reynolds, Dandan Li, Iain Marlow, Arsalan Shahla and Margaret Talev.)