US pulls the plug on waivers, says India will have to cut Iran oil import to zero

The US will not grant any more waivers to any country, including India and China, that import Iranian crude oil in order to step up pressure on Tehran

New Delhi: Putting an end to days of speculation, the Trump administration announced on Monday that the United States will not grant any more waivers to any country, including India and China, that import Iranian crude oil in order to step up pressure on Tehran to give up its nuclear weapons and ballistic missile programme. A statement released by the White House read, "President Donald J Trump has decided not to reissue Significant Reduction Exceptions (SREs — as the waivers are called) when they expire in early May."

"This decision is intended to bring Iran's oil exports to zero, denying the regime its principal source of revenue," the release added.

More details to be available shortly

US Secretary of State Mike Pompeo is expected to make public more details in an announcement shortly. India was among the eight nations who had been given waivers by the US for a period of six months to absorb the impact on sanctions on Iran and to enable them to reduce their import of Iranian crude oil to zero in a phased manner. The other countries on the list were China, Japan, South Korea, Turkey, Taiwan, Italy and Greece.

Why India prefers Iranian crude?

India had been trying to get an extension on waiver from the US in order to prevent its oil import bill from rising further. For India, Iranian crude makes for the cheapest option and the country needs to keep the imports coming in order to prevent the landed average price of crude from going up. Crude prices have risen from about $54 a barrel in December-end to nearly $70/barrel in April first week. Iran also offers India virtually shipping charge-free crude deliveries and credit over a longer period of time.

The US had given India and seven other countries a waiver in November last year to continue oil imports from Iran for six months. The waiver ends in May.

In order to bypass the US financial system, India has already given Iranian private lender Bank Pasargad to open a branch in Mumbai, which could be used to make payments for oil imports.