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U.S. will regret sanctions

09 November 2018

The exception granted by Secretary of State Mike Pompeo to U.S. sanctions reimposed on Iran on Monday also will permit the construction of a railway line from Chabahar port to Afghanistan, and for shipments to the war-torn country of non-sanctionable goods, like food and medicines, the spokesman said. The first would be that Mr Trump and his administration effectively blinked first in their dispute with Iran over its nuclear and missile programmes.

India, Iran's second-biggest oil customer, also cut orders ahead of the sanctions, hoping its effort to reduce reliance on Tehran would pay off in Washington and win it a waiver once the sanctions restarted.

Landlocked Afghanistan also has few better options for importing petroleum products than Iran for the time being.

"We've only seen 10 tankers loading at, or signaling for Iranian terminals in November so far, which is significantly lower than what we usually see at the beginning of the month", said Kpler, a data intelligence company.

Supply concerns that drove crude to a four year high last month faded on speculation the United States would soften the blow of its sanctions on Iran to lower pump prices at home.

"Some OPEC members of these two committees have clearly taken sides with the (United States) in imposing its unilateral and unlawful sanctions against".

Yet, much of Iran's oil exports are "still unsustainable", says Goldman's Hinds. In hopes of mitigating the immediate economic hit, Iranian authorities have hinted that Tehran might have to sell its oil at a discount to entice buyers going forward. If all Iranian oil is withdrawn from the market, it would lead to a huge increase in oil prices which would be a shock to the global economy.

One Indian source close to the country's refining sector said India would likely be allowed to import around 300,000 bpd of Iranian crude during the exemption period compared with normal volumes of around 450,000 to 550,000 bpd.

But they may not be happy if crude prices continue to weaken. Since May, when Trump took Washington out of the nuclear deal, prices of bread, cooking oil and other staples have soared and the value of the rial currency has plunged. Perhaps, the trade war sentiment and Iran sanctions waivers are denting the bullish oil sentiment.

The sanctions, however, will inevitably erode Iran's state finances and raise already high inflation and jobless rates, making life harder for ordinary Iranians.

On November 5, the Trump administration had imposed the "toughest-ever" sanctions on Iran's banking, energy and shipping industries, in a move aimed at altering the "behaviour" of the country's regime.

There was no need for India to cravenly accept the USA sanctions on Iran.

On Monday, the United States imposed "the toughest ever" sanctions on Tehran aimed at altering the Iranian regime's "behaviour".

U.S. will regret sanctions