The United States on Monday partially lifted the sanctions on Iranian oil exports and authorised the sale of Tehran’s oil following “encouraging progress” during the first day of high-level talks in Switzerland, in return for commitments on nuclear inspections and free transit through the Strait of Hormuz.
Details of the temporary 60-day general licence
The waiver was announced by the US Treasury Department, and Iran will be allowed to sell crude oil and petrochemical and petroleum products of Iranian origin until August 21.
The waiver is part of the 60-day memorandum of understanding (MoU) signed between Washington and Tehran on June 17.
Economic impact and global energy dynamics
As the US temporarily lifts sanctions on Iranian oil, it eases the pressure on Tehran’s energy sector and could open pathways for more Iranian oil exports, considering the current global supply disruptions and volatility in the energy market.
Historical context of US trade restrictions
However, the general licence issued by Treasury Secretary Scott Bessent states that Iranian oil can be imported into the United States as and when necessary to complete its sale, delivery or offloading.
Notably, America has not imported Iranian oil since 1979 when Washington imposed measures following the 1979 Islamic Revolution in the country, Reuters reported.
Strategic commitments from Tehran and Washington
Announcing the waiver, Bessent in a post on X wrote, “In line with the ongoing productive talks in Switzerland, Iran has committed to free and open transit in the Strait of Hormuz and to permit International Atomic Energy Agency (IAEA) inspectors into their country.
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As part of the framework, Treasury has issued a temporary 60-day general license authorizing the production, delivery, and sale of Iranian oil.”
The temporary US waiver allows Iran to sell and deliver oil free of sanctions until 12:01 am on August 21 to nearly every country across the globe, except for US-sanctioned North Korea, or Cuba, and Crimea. The terms of the licence state that payment of funds to Tehran can be made in US dollar demontinated funds.
Implications for India’s energy sourcing strategies
India has been one of the major buyers of Iranian oil along with South Korea, Japan, Greece, Taiwan, Italy and Turkey until US sanctions were reimposed in 2019, banning the import of Iranian crude.
Iran accounted for 14 percent of India’s crude imports in 2009, making the country the second-largest supplier, the New York Times reported. However, New Delhi stopped buying Tehran’s oil altogether after President Donald Trump imposed sanctions on the Islamic Republic in 2019.
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Considering the supply crunch, India will benefit from America’s 60-day temporary waiver of Iranian oil.
Though India’s Russian oil imports have touched record levels, with data revealing that in June itself, New Delhi imported 2.6 million barrels per day of oil from Moscow, which is nearly a total of 54 percent of total crude imports for the period, according to Kpler, a market analytics firm.
