US signals it would consider some exemptions on Iranian oil

The Trump administration signaled for the first time it might consider exemptions from U.S. sanctions for countries as they reduce their dependency on Iranian oil.

“We are going to very strongly enforce the Iran nuclear sanctions,” Treasury Secretary Steven Mnuchin said Friday. “We’ve told our counterparts that we expect them to enforce the sanctions, but if there are specific situations, we’re open to listening.”

Mnuchin and Secretary of State Mike Pompeo spoke to reporters aboard Pompeo’s plane as they flew back from Mexico, where they held talks with the government and president-elect on border security, immigration and trade negotiations.

After President Donald Trump withdrew from the Iran nuclear deal in May, his administration has warned countries to reduce their Iranian oil imports to zero or face U.S. sanctions, vowing that no exemptions would be made.

But Mnuchin, who said he would be discussing the issue with G20 finance ministers this week in Buenos Aires, Argentina, signaled that there could be some wiggle room as countries gradually reduce their dependency on Iranian oil to avoid further volatility in the energy markets.

“We’re not making any commitments,” Mnuchin said. “We want people to reduce oil purchases to zero, but in certain cases, if people can’t do that overnight, we’ll consider exceptions.”

Last month, Washington’s threat of sanctions sent oil prices surging, and U.S. crude spiked 3.5% to about $70.50 a barrel. Prices have climbed sharply this year, in part due to concerns about U.S. sanctions on Iran disrupting supply from the OPEC nation.

Trump has repeatedly complained about oil prices being too high, even though his own policies have played a role.

Last month, OPEC agreed to pump more oil to compensate for the loss of barrels from Iran.

When the administration announced it was withdrawing from the Iran nuclear deal, it imposed several new sanctions, including ones that will require all countries to eliminate Iranian oil imports by November.

National security adviser John Bolton, meeting last month with European officials to talk about the U.S. campaign against Iran told them there would no exemptions from sanctions for European companies or entities that do business with Iran under U.N. sanctions, European officials said. Bolton said the U.S. was looking for Iran’s “unconditional surrender” in meeting demands on Iran made by Pompeo during a speech in late May. The top U.S. diplomat said at the time that the U.S. wanted Iran to abandon its nuclear program, pull out of the Syrian war, and cut ties to terrorism.

Germany, France and the United Kingdom — the European signatories to the deal known collectively as the E3 — opposed the U.S. decision to leave the deal and have lobbied the White House not to impose so-called “secondary sanctions” on their companies that do business in Iran or to at least issue waivers for parties to the deal and other U.S. allies in hopes of upholding the agreement without U.S. participation.

“We’ve said very specifically, there’s no blanket waivers, there’s no grandfathering. We will consider situations on a case-by-case basis. I think particularly in the wind down, we want to be very careful in the wind down around the energy markets to make sure that people have the time,” Mnuchin said. “The State Department has the ability to issue waivers around significant reductions in the oil markets. That’s something that Treasury and State will be doing. We’re already working very closely with our counterparts,” Mnuchin said. “We’ll consider them appropriately.”

Pompeo said that while some countries have fought the measures, most are just looking for more patience with the administration as they wind down their dependency on Iranian oil.

“I think, the world is complying,” he said. “There have been some governments that have fought it, but the businesses understand that America is serious about this, and so I think that’s important for everybody to consider as we move into the end of the wind down period, come the first week in November. “

Pompeo said the goal is to deny Iran resources to support terrorism and continue its aggressive behavior around the world.

“If it’s small dollars or there’s a particular reliance interest they’re there, there’s lots of things that will go into how we’re thinking about this, but make no mistake about it, we’re determined to impose these sanctions globally and broadly,” he said.

Pompeo has been a hardline voice on Tehran. He has not been shy in speeches or social media posts about his desire to stop Iranian Supreme Leader Ali Khamenei from wreaking havoc in the Gulf. He has increased designations of Iranian officials and entities under terror-related executive orders and U.S. officials says he is in favor of designating the Iranian Revolutionary Guards Corps, a powerful arm of the military, as a foreign terrorist organization.

Later this week, Pompeo will deliver a speech at the Ronald Reagan Presidential Library in California on “Supporting Iranian Voices” and will visit with members of the Iranian-American community in the United States.

“We’re using every element of American power to try to achieve the ends, to try to get Iran to behave in a way that is rational and normal,” Pompeo said.