US ends Iran sanctions waivers: volatile summer ahead

On 22 April, the US secretary of state announced that the US administration will not renew on 2 May its waivers to the US secondary sanctions imposed on Iran. The US is reverting to its original goal of the 2018 sanctions, to impose maximum economic pressure on Iran, by reducing crude and condensate exports to zero. This could remove between 1.1 to 1.3 million b/d from global liquids supply, although it is not yet clear to what extent all of the nations which import Iranian oil will comply to the sanctions fully. We have analysed the likely exports with no waivers and believe around 0.7 – 0.75 million b/d will continue, mostly to China and India. Trump has stated that he is talking with Saudi Arabia and the UAE to make up any shortfall in global crude, and thus alleviate oil price increases. With additional global risks to oil price from Venezuela sanctions and escalating civil unrest in Libya, we assess the market impact resulting from no renewal of waivers.