The US is preparing to reimpose sanctions on Iran that have been frozen since January 2016, a move that could cut global oil supplies by 500,000 b/d-1 million b/d by the end of the year and disrupt other energy and metals markets.
* US will consider waivers for countries that curb imports
* Sanctions could shut in 500,000-1 million b/d by year-end
* Iran says it will continue JCPOA with five other countries
International buyers of Iranian oil have until November 4 to wind down contracts before the US reimposes sanctions on the oil, energy, shipping and insurance sectors, according to a Treasury Department fact sheet.
As it did from 2012-15 before the nuclear deal, the US will consider allowing countries to continue importing Iranian crude as long as they demonstrate they are significantly reducing those volumes every 180 days, Treasury said.
"Countries seeking such exceptions are advised to reduce their volume of crude oil purchases from Iran during this wind-down period," the notice said. "Consistent with past practice, the Secretary of State, in consultation with the Secretary of the Treasury, the Secretary of Energy, and the Director of National Intelligence, would make such determinations following a process of rigorous due diligence."
President Donald Trump announced Tuesday that the US would withdraw from the Iran nuclear deal and that "powerful sanctions will go into full effect."
However, Trump invited the deal's partners to return to the negotiating table to work on a broader agreement that has longer limits on Iran's nuclear program, and addresses its ballistic missile program and destabilizing regional activities.
National Security Advisor John Bolton told reporters in a White House briefing that those talks would resume early Wednesday.
Crude futures closed in negative territory, but well off session lows. NYMEX June crude settled $1.67 lower at $69.06/b. ICE July Brent settled down $1.32 at $74.85/b.
Reimposing US sanctions on Iranian oil buyers will likely have an immediate impact of less than 200,000 b/d and block less than 500,000 b/d after six months, according to most analysts surveyed by S&P Global Platts. But some analysts expect a substantial supply disruption of up to 1 million b/d.
Iran produced 3.83 million b/d of crude in April, according to the latest S&P Global Platts OPEC survey, up from 2.91 million b/d in January 2016, when the Joint Comprehensive Plan of Action took effect.
Iranian President Hassan Rouhani said after Trump's announcement that the JCPOA would continue among its other partners, China, France, Germany, Russia and the UK. He ordered the foreign ministry to hold talks with the countries within the next two weeks.
"We are now with a JCPOA without the US," he said. "We knew that Trump wouldn't be faithful to the JCPOA for a while now."
Rouhani said Iranian economic growth and stability would continue.
"The Iranian people are more united and resolute," he said. "Trump's move was a psychological war and economic pressure. We won't let him win this war."
Saudi Arabia said it welcomed the US exit from the nuclear deal, adding that Iran exploited the economic benefits of the frozen sanctions to continue destabilizing activities in the region.
OPEC plans to stick to its production cuts despite renewed US sanctions on Tehran, said UAE Energy Minister Suhail al-Mazrouei.
"Working collaboratively with our partners, our joint efforts to rebalance the oil market and bring investment back into our industry are progressing well," Mazrouei, who also holds the rotating OPEC presidency this year, said on Twitter. "Collectively, we will continue to focus on these goals."
Russia "will just be really happy" if the collapse of the nuclear deal sends oil prices above $80/b and allows it to ease or end its 300,000 b/d in production cuts under the OPEC agreement, said Alexander Kornilov, a Moscow-based analyst at ATON. He estimates Russia is "well equipped" to increase production in a month to 100,000-150,000 b/d if the OPEC limits end.
The US sanctions target petroleum-related deals with the National Iranian Oil Company, Naftiran Intertrade Company, National Iranian Tanker Company, among others, Treasury said. It covers oil, oil products and petrochemical products from Iran.
The sanctions also cover Iran's port operators and shipping and shipbuilding sectors, including the Islamic Republic of Iran Shipping Lines, South Shipping Line Iran or their affiliates.
The so-called secondary sanctions enforced in 2012-15 cut off international companies from the US banking system if they continued to do business with Iran.
Analysts doubt the US sanctions will have the same impact as before, given the lack of interest from European countries in reimposing their own restrictions that increased pressure on Tehran ahead of the nuclear deal.
