Iran Sees U.S. Caving on Bid to Crush Lucrative Oil Trade

Fresh round of oil waivers would provide Tehran with new cash lifeline

A picture shows export oil pipelines at an oil facility on the shore of the Gulf
A picture shows export oil pipelines at an oil facility on the shore of the Gulf / Getty Images
• March 11, 2019 5:30 pm


Iranian leaders are betting on the Trump administration to cave in on a key piece of its tough new sanctions aimed at choking off the Islamic Republic's access to lucrative crude oil markets, according to multiple sources who spoke to the Washington Free Beacon.

The Trump administration has been stuck in a tricky diplomatic situation following its decision last year to grant eight countries waivers permitting them to continue purchasing Iranian crude oil, a decision that riled many Iran hawks on Capitol Hill who argued the administration was leaving the Islamic Republic with a key financial lifeline.

With the waivers due to expire in May, several nations are already beginning to lay the groundwork for the issuance of new oil waivers, a move being celebrated by Tehran and met with outrage among U.S.-based Iran hawks who want President Donald Trump to follow through on his promise of placing maximum pressure on Iran.

The fight over new oil waivers is reigniting an internal administration tug-of-war over how far it will go to isolate Iran in the face of opposition from European allies who continue to keep the landmark nuclear deal on life support as they create methods to skirt the Trump administration's economic sanctions on Iran.

India, one of the eight nations who were given a six-month waiver exempting them from sanctions, is again angling to obtain another pass, according to reports in Iran's state-controlled media. There are also reports that South Korea has similarly been pushing U.S. officials to grant additional waivers.

While the United States has not ruled out new waivers for these countries, officials have made clear that this is not the preferred course of action. However, there appear to be some elements of the administration who would like to see these countries given yet another pass to avoid a dustup with European allies still hungry to do business with Iran.

The battle over these oil waivers is reflective of the larger intra-administration debate over how far it will go in its efforts to penalize Iran and strangle the regime. While Trump had promised what he called "maximum pressure" on Iran, the administration has wavered at multiple junctures, stoking anger on Capitol Hill, where there is a great appetite for further sanctions, including on those still purchasing Iranian crude oil.

Oil waivers were originally granted on a six-month basis to China, Japan, South Korea, India, Taiwan, Italy, Turkey, and Greece. The discussions appear to be ongoing with these nations, as U.S. officials hold meetings this week with South Korean, Indian, and other nations' leaders.

Some U.S. officials argue that if these countries have demonstrated they are making strides to reduce their Iranian oil imports, a fresh round of waivers may be the best course of action in order to avoid spooking global oil markets.

However, more hardline elements of the administration, as well as their allies on Capitol Hill, view oil as a red line. They see the Trump administration as capitulating to Iran's allies and walking back its promise to strangle Iran's already ailing economy.

"The regime will be popping Persian champagne if the State Department grants any more oil waivers in May," said one veteran foreign policy adviser with close ties to the administration. "The longer the State Department leads the world to believe more waivers are coming, the harder it will be to enforce maximum pressure on Iran."

A second source, also a veteran Iran analyst briefed on the interagency battle over keeping parts of the Iran deal in place, told the Free Beacon the administration must stand behind its rhetoric of zeroing out Iranian oil exports.

"There's no real debate any more," the source said. "Administration officials have been crystal clear, in public, that oil markets can absorb a nearly complete zeroing out of Iranian oil. Anyone who gives Iran waivers is doing it because they want to, not because they have to."

The State Department did not respond to multiple requests for comment on the oil waiver debate.

Published under: Iran, Oil, Sanctions