U.S. to End Iran Oil Waivers to Drive Tehran’s Exports to Zero – The Wall Street Journal

It wasn’t immediately clear whether the decision to end oil waivers would put a complete halt to permitted exports.

A “wind down” grace period would allow certain customers to continue to receive the oil it had already purchased, or agreed to buy, two people familiar with the matter said. It wasn’t immediately clear how such a mechanism would work.

The State Department didn’t immediately respond to a request for comment. The decision was earlier reported by the Washington Post.

Earlier this month, the State Department’s top envoy for Iran, Brian Hook, said that three jurisdictions out of the eight that received oil waivers last year had already moved to zero imports.

Mr. Hook didn’t name them, but analysts that study the oil market have said Italy, Greece and Taiwan have halted imports this year.

U.S. sanctions targeting oil exports from Iran and Venezuela have tightened global supply and driven prices higher this year. Markets are closely watching the latest outbreak of chaos in Libya, which has been pumping more than 1.2 million barrels of oil a day.

Libyan officials have warned that output risks dropping to zero if hostilities escalate. The uncertainty has helped cause the global benchmark oil price to rally to its highest levels in nearly six months, surging above $74 a barrel on Sunday evening.

Mr. Trump and the team led by his national security adviser, John Bolton, have pushed for a more hard-line strategy leading up to the May 2 deadline, urging a more complete push to zero out Iranian exports.

Buyers had received conflicting messages: Some State Department officials, even in recent weeks, had assured waiver recipients of more to come. That led White House officials to take more direct control of diplomatic efforts in order to end the waivers.

White House officials expected an announcement about the end of waivers to come through its own channels, reflecting the president’s own role in managing the removal of Iranian oil from the market.

Mr. Trump’s administration has relied heavily on personal relationships fostered with Saudi Arabia to persuade the kingdom to pump more oil to balance out the loss of Iranian barrels.

Earlier this month, the Trump administration designated Iran’s Islamic Revolutionary Guard Corps as a foreign terrorist organization, U.S. officials said, aiming to step up U.S. pressure against Tehran.

Following the announcement, Mr. Hook said the Trump administration has targeted Iran with 25 rounds of sanctions in the past two years, including nearly 1,000 individuals and entities.

While U.S. sanctions on Iran have hurt its economy and strained the regime’s budget, they haven’t led Tehran to pull back from its military role in Syria in support of President Bashar al-Assad or scale back its paramilitary role in the region.

Iran is on track to be a major foreign policy issue in the lead-up to next year’s U.S. presidential election, with some Democratic candidates pledging to return to the 2015 nuclear accord with Tehran.

The decision to end oil waivers comes after months of pressure by Republican hawks—such as Sens. Ted Cruz (R., Texas), Tom Cotton (R., Ark) and Marco Rubio (R., Fla.)—to act decisively to curb Iran’s finances.

Mr. Trump unilaterally withdrew from the pact with Iran and six major powers last year, undoing the flagship foreign policy effort that marked his predecessor’s administration.

The Trump administration has outlined 12 demands that include requiring Iran to give up its right to enrich uranium, which it retained under the 2015 agreement; cease its support for militant groups like Hamas; and stop issuing threats against Israel.

Iran’s leaders have said they have no interest in negotiating with the Trump administration on those demands.

Write to Jessica Donati at jessica.donati@wsj.com

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