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Monday, 22 April 2019 17:06


Written by Femi Ogunkolati

It seem the NSA John Bolton and the hawks in the Trump Administration have finally won the argument. Washington has confirmed that there will be no waivers for customers of Iranian Oil after 2nd of May. Oil jumped to a new 6 month high as  the news hit the headlines. This day always seemed inevitable, what is not so clear is the much anticipated fallout. Already China, the largest consumer of Iranian oil has accused the US of over reaching their jurisdiction. They went on to say “China’s cooperation with Iran is open, transparent, reasonable and legitimate, and should be respected,”According to White House Press Secretary Sara Sanders “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,” . President Donald Trump further  tweeted that “Saudi Arabia and others in OPEC will more than make up the Oil Flow difference in our now Full Sanctions on Iranian Oil. ”

US waivers expire  on May 2. These  allowed China, India, Japan, South Korea, Italy, Greece, Turkey and Taiwan to continue importing Iranian crude without  retaliatory U.S. sanctions. With the end of the waivers, the buyers face being cut off from the American financial system if they buy Iranian oil.  The difficulty for the Buyers comes from not only having to find suitable replacement grades but the increase in prices and the effect that will have on profits. It seems unconscionable that Japanese, Korean and Indian companies should be made to subsidise this US action. There is also the issue of the OPEC production cut agreement to consider, if we are to believe the US statement then the production cut agreement has effectively been terminated. The future of OPEC seems far from secure.  The special relationship between Washington and Riyahd undermines the basis for OPEC, where two member states are under US sanctions one of which holds the presidency of the organisation.

Tehran have warned that it will close the  Strait of Hormuz in tetaliation for the sanctions. Were such an act to take place', it would undoubtedly lead to conflict with oil prices spiralling out of all control. Were any such conflict arise however it would provide Iran the legal basis for closing the Straits. The ostensible objective of the sanctions is to get Tefhan to abandon its nuclear ambitions and as such the US can always rely on the Saudis for support




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