President Trump has signalled his intent to dismiss the waivers on applying sanctions on countries and individuals that currently import crude oil directly or indirectly from the Islamic Republic of Iran.
The exemptions for China, India, Japan, South Korea and Turkey expire in May, after which they could face US sanctions themselves as President Trump fulfils an electoral campaign promise to end Iran’s ability to export crude oil, break the country’s economy and force a change in government.
The biggest impact will be felt by China, which has long-standing sovereign relationships with Iran and has imported crude oil throughout previous US administration’s sanctions.
China and the other non-aligned have reacted with various degrees of outrage to what they see as the US imposing domestic politics on their sovereign right to freely trade, with the implication that the move by the US will impact on political and security relationships.
The move by the US was signalled twelve months ago, and with the 1 May deadline only a few weeks away, it would appear that in practical terms the situation has been accepted.
Twelve months ago, there were 88 VLCC and Suexmax crude oil tankers underway or having completed laden voyages from Iran to various destinations including China (23 tankers) and India (13 tankers) in the six weeks following 1 March 2018 (VesselsValue Trade data).
In the six weeks following 1 March 2019, VesselsValue data shows that only 12 VLCC or Suezmax crude oil tankers have completed laden voyages from Iran to China (five tankers), Japan (three), and to the UAE and South Korea.
Currently, the only tankers on laden voyages from Iran are two NITC VLCCs underway to China, which suggests that on a direct trade level, the warnings from the US administration have been heeded.
During the last episode of full-scale sanctions, NITC was instrumental in storing Iranian crude oil on its VLCCs and this is a likely scenario during this episode, too.
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