Oil prices drop as 'trifecta of trouble' may cause glut

Secretary Jeremy Hunt

Secretary Jeremy Hunt

He said the department had evidence that Iranian vessels are trying to evade US sanctions by disabling location transponders used to prevent collisions - with the goal of making Iran's oil exports harder to track.

Iran late past year inaugurated the port on the Indian Ocean, which is being built largely by India and is expected to provide a key supply route for Afghanistan while allowing India to bypass rival Pakistan to trade with Central Asia and Africa. Just $5 a month.

The United States on Monday re-imposed sanctions against Iran's oil exports to punish Tehran for its involvement in several Middle Eastern conflicts. The sanctions are aimed to hit not just Iran's energy sector but also its financial, shipping, and shipbuilding sectors. In May 2018, however, Trump withdrew the United States from the agreement, making a return of sanctions all-but-inevitable. But, fearing a price spike, it granted Iran's biggest buyers - China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey - sanctions waivers.

The latest batch of US sanctions severely impacts Iran's oil industry, the major source of the country's foreign revenue. The US would continue to exercise pressure on India to go towards zero imports over a period of time. With major cuts in the cheaper oil imports from Iran, the overall oil import bill is bound to rise further with its consequent adverse effect for the economy.

In post-settlement trade, both contracts extended losses.

The exemption for Chabahar is linked to the port's importance for both India and Afghanistan, and likewise the importance of India and Afghanistan to USA foreign policy aims.

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"These activities are vital for the ongoing support of Afghanistan's growth and humanitarian relief", the spokesman said in a statement emailed to Reuters.

In May 2016, India, Iran and Afghanistan inked a pact which entailed establishment of Transit and Transport Corridor among the three countries using Chabahar Port as one of the regional hubs for sea transportation in Iran, besides multi-modal transport of goods and passengers across the three nations. The port stands in contrast to China's own port project in Gwadar, Pakistan.

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Waivers, however, were granted to eight major importers to continue buying Iranian petroleum products without penalty for another six months.

The exemption for Chabahar comes as good news for India and Afghanistan, but undercuts the Trump administration's portrayal of the sanctions as the "toughest ever". If the sanctions are meant to "convince the [Iranian] regime to abandon its current revolutionary course", as Pompeo said on Monday, such exceptions surely undercut that effort. "It can either do a 180-degree turn from its outlaw course of action and act like a normal country, or it can see its economy crumble", Pompeo said.

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