State Dept aims to cut Iran oil exports to zero but leaves wiggle room for some importers

  • A senior State Department official reaffirmed that the Trump administration's goal is to get as many countries as possible to cut their Iranian oil purchases to zero by November.
  • The administration will not grant broad waivers for countries, but will work with nations actively reducing their imports on a case-by-case basis.
  • The tougher-than-anticipated deadline helped send oil prices to multiyear highs when it was first announced last week.
A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Gulf.
Raheb Homavandi | Reuters
A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Gulf.

A senior State Department official on Monday reaffirmed the Trump administration's goal of reducing Iran's oil exports to zero by November. However, he signaled that some importers could get leeway to taper off purchases beyond the deadline.

Oil prices soared to new multiyear highs last week after another State Department official told reporters the administration is pushing foreign companies to completely cut off oil purchases from Iran by Nov. 4. The announcement shocked the market because some oil watchers expected Washington to let importers reduce their purchases over many months, a model first implemented by the Obama administration.

Brian Hook, the State Department's director of policy planning, reiterated the administration's hardline stance, but addressed the market's concerns during the Monday briefing.

"Our goal is to increase pressure on the Iranian regime by reducing to zero its revenues from crude oil sales. We are working to minimize disruptions to the global market, but we are confident that there is sufficient global spare oil production capacity," he said.

On Saturday, President Donald Trump said Saudi Arabia's king had agreed to his request to raise oil output by as much as 2 million barrels a day — twice what the Saudis agreed to a week earlier at a meeting of two dozen producer nations. The White House later walked back Trump's claim that the leaders had reached an agreement, saying Saudi Arabia would consider hiking output further if necessary and after consulting its oil market allies.

Hook also appeared to acknowledge that some oil buyers in countries such as China and Turkey may still be purchasing Iranian barrels by the time the November deadline arrives. He said the administration is unlikely to grant broad waivers for countries, but left open the possibility of granting some import licenses for nations attempting to comply with the sanctions.

"We are not looking to grant licenses or waivers broadly on the re-imposition of sanctions because we believe pressure is critical to achieve our national security objectives," he said.

"We are prepared to work with countries that are reducing their imports on a case-by-case basis, but as with our other sanctions, we are not looking to grant waivers or licenses," he added.

According to Hook, 50 companies around the world have agreed to stop buying oil from Iran following consultations between U.S. State and Treasury officials and their counterparts in Europe and Asia.

Sanctions experts in the Obama administration allowed companies to continue conducting some business with Iran, so long as their countries reduced Iranian crude imports by at least 20 percent every 180 days. The measure aimed to prevent a sudden, uncontrolled collapse of the Iranian economy or a precipitous spike in oil prices while international negotiators hammered out a deal with Iran to limit its nuclear activity.

Trump abandoned that accord in May, in the process restoring wide-ranging sanctions against Iran that are widely opposed by Europe, China and Russia, which negotiated the 2015 agreement with the Obama administration.

The European Union has asked Trump for a blanket waiver so they can preserve the nuclear deal by maintaining business ties with Iran. The EU has put in place measures blocking the U.S. penalties, but European companies are still preparing to comply with the U.S. sanctions.

Despite the dispute over the nuclear deal, Hook said the nations are united in their opposition to Iran's role in conflicts in places like Yemen and Syria.

"We believe that China and Russia and the other countries who are part of the Iran deal are tired of the terrorism that Iran is causing; they don't support the proliferation of missiles around the Middle East. They don't support this ... vast proxy network of terrorism," he said.

To be sure, while the EU opposes Syrian president Bashar Assad, Russia and Iran are his two chief backers in Syria's long-burning civil war. Russia has allowed Iran to build up a significant military position in Syria, which is believed to support the flow of weapons from the Persian Gulf to the Mediterranean.