On April 22, Secretary of State Mike Pompeo announced that the United States will stop providing sanctions exemptions to countries that import Iranian oil. “We will continue to apply maximum pressure on the Iranian regime until its leaders change their destructive behavior, respect the rights of the Iranian people, and return to the negotiating table,” said Pompeo. He noted that oil sales account for up to 40 percent of Iran’s revenue. The Trump administration's stated goal is to bring Iranian exports down to zero.
Eight countries received exemptions in November, which will expire on May 2. Three countries – Greece, Italy and Taiwan – have already reduced their Iranian imports to zero. China, India, Turkey, Japan, and South Korea will need to do the same or risk running afoul of U.S. sanctions.
Both Pompeo and the White House emphasized that they had taken the stability of the global oil market into consideration. “The United States, Saudi Arabia, and the United Arab Emirates, three of the world’s great energy producers, along with our friends and allies, are committed to ensuring that global oil markets remain adequately supplied,” said a White House statement. Despite the reassurance, oil prices hit a six-month high on April 22. Brent crude futures jumped three percent to $74.31 per barrel. U.S. West Texas Intermediate crude futures rose 2.3 percent to $65.50. The following are remarks and statements from U.S. officials with a State Department fact sheet.
Secretary of State Mike Pompeo
Almost one year ago, after withdrawing from the Iran nuclear deal, President Trump implemented the strongest pressure campaign in history against the Islamic Republic of Iran. The goal remains simple: to deprive the outlaw regime of the funds it has used to destabilize the Middle East for four decades, and incentivize Iran to behave like a normal country.
Up to 40 percent of the regime’s revenue comes from oil sales. It’s the regime’s number one source of cash. Before our sanctions went into effect, Iran would generate as much as $50 billion annually in oil revenue. Overall, to date, we estimate that our sanctions have denied the regime well north of $10 billion. The regime would have used that money to support terror groups like Hamas and Hizballah and continue its missile development in defiance of UN Security Council Resolution 2231, and it would have perpetuated the humanitarian crisis in Yemen.
Our goal has been to get countries to cease importing Iranian oil entirely. Last November, we granted exemptions from our sanctions to seven countries and to Taiwan. We did this to give our allies and partners to wean themselves off of Iranian oil, and to assure a well-supplied oil market.
Today I am announcing that we will no longer grant any exemptions. We’re going to zero – going to zero across the board. We will continue to enforce sanctions and monitor compliance. Any nation or entity interacting with Iran should do its diligence and err on the side of caution. The risks are simply not going to be worth the benefits.
I want to emphasize that we have used the highest possible care in our decision to ensure market stability.
The United States has been in constant discussion with allies and partners to help them transition away from Iranian crude to other alternatives. And we have been working with major oil-producing countries to ensure the market has sufficient volume to minimize the impact on pricing. Both the Kingdom of Saudi Arabia and the United Arab Emirates have assured us they will ensure an appropriate supply for the markets. And of course, the United States is now a significant producer as well.
I can confirm that each of those suppliers are working directly with Iran’s former customers to make the transition away from Iranian crude less disruptive.
And as I said, we’re doing our part here in the United States too. In 2018, crude production increased by 1.6 million barrels per day over the 2017 levels. And the U.S. Energy Information Agency projects an increase of an additional 1.5 million barrels per day in calendar year 2019.
Look, with the announcement today, we have made clear our seriousness of purpose. We are going to zero. We – how long we remain there at zero depends solely on the Islamic Republic of Iran’s senior leaders.
We have made our demands very clear to the ayatollah and his cronies. End your pursuit of nuclear weapons. Stop testing and proliferating ballistic missiles. Stop sponsoring and committing terrorism. Halt the arbitrary detention of U.S. citizens.
Our pressure is aimed at fulfilling these demands and others, and it will continue to accelerate until Iran is willing to address them at the negotiating table.
Finally, as I have said before, these demands are not just coming from the United States Government and many of our allies and partners. They are similar to what we hear from the Iranian people themselves. I want the Iranian people to know that we are listening to them and standing with them.
We will not appease their oppressors, as the last administration did. Our hopes are for a better life for them, and all people afflicted by the regime’s violence and destruction.
I will now take a few questions.
QUESTION: Thank you. I just – broadly on Iran, aside from this, your goal – you just said bring them back to the negotiating table. But are you really interested in renegotiating the JCPOA or negotiating something like that, or are you just looking for – are all these steps that you’re taking aimed at just getting them to change their behavior without getting anything in return?
And then secondly, if you could just address a report about comments you allegedly made to Iranian diaspora leaders last week in Texas.
SECRETARY POMPEO: What comments? What in particular?
QUESTION: That the – you’re not interested in any kind of military intervention, that it’s basically economic, diplomatic pressure, and that – and some – I don’t know, some kind of comment about the MEK, and you’re not --
SECRETARY POMPEO: Let me – Matt, thank you. Let me try and take those; I’ll take them in reverse sequence. We’ve not supported any outside group. We’re supporting the Iranian people. And so I get questions all the time about outside Iranian groups, including the MEK, and I – every time I engage with anyone – and this was a meeting with folks who have family, often had family inside of Iran – wanted to make clear to them we’re supporting the Iranian people, not any particular group. That’s the U.S. administration’s policy.
Second, with respect to our objectives, we’re happy to receive the – we’re happy to get the outcome however we can achieve it. The President’s always made very clear, we’ve made clear to Iran’s leaders, that if Americans are attacked, we will respond in a serious way. And so I don’t think there should be any doubt about the fact that if it is required for us to take an action in response to something that Qasem Soleimani does or the Iranian leadership, or a Shia militia somewhere in the world, that we will respond to that in a way that is appropriate to protect American interests wherever we find them.
With respect to our goal, we laid them out. We laid them out. There are 12 things we’re looking for. When we get to those things, we are happy to re-engage with Iran as a normal nation. If they’re prepared to come to the table and negotiate those things to get to that outcome, fantastic. If not, the campaign with which we’ve been engaged since, frankly, the administration took office, but more clearly since the President’s decision to withdraw from the JCPOA, the campaign will continue. And we built that enormous coalition to work on this, right. Gulf state partners, Israel, lots of countries that are working alongside us to achieve these objectives.
You see the Europeans with increasing risk from the assassination campaign that’s taking place inside of their country. We watch as Iran continues to try and have a role in protecting Maduro in Venezuela. This is causing countries in South America to understand that the expeditionary nature of the Islamic Republic is something that threatens citizens all across the world. And so this is not the United States alone; it’s a true coalition working to achieve the ends which we have laid out.
QUESTION: With the maximum pressure campaign, have you detected any change in the Iranian behavior, with the few exception that you mention I think before, which is short of cash of the Hizballah and maybe to not giving all to the Syrian regime? And also talking about senior leadership, do you have any comment about the appointment of the new leader of the IRGC – I think his name is Mr. Hossein Salami, because he’s been praised as a hardliner, anti-U.S.
SECRETARY POMPEO: So we have watched Iran have diminished power as a result of our campaign. Their capacity to wreak harm around the world is absolutely clearly diminished. I talked about it with respect to Hizballah not being able to make payroll in a timely fashion. I’ve talked about it in other places as well. What we’re announcing this morning, the designation of the IRGC a couple of weeks back, actions that we’ll take in a handful of weeks – each of these things will continue to support the Iranian people so that they can get what they ultimately are so desperately seeking.
I don’t have any comment on the new appointment of the IRGC other than – IRGC leader other than this: You described him as a hardliner.
SECRETARY POMPEO: It is the case that every Iranian leader – that includes President Rouhani and Foreign Minister Zarif – has accepted the notion, has accepted this fundamental notion of the nature of the regime itself, right. So they accept that the Islamic Republic of Iran is the appropriate method for which Iran to engage – when – once they’ve conceded that, in our view, these distinctions are often – are often insignificant. That is, if you are pushing and you are supporting Qasem Soleimani’s efforts in Iraq, if you’re supporting the efforts of the IRGC’s Qods Force and Hizballah, and you’re supporting the underwriting of Hamas, by definition that is working against what America has laid out as our objective.
QUESTION: Mr. Secretary, I want to ask you about the timing of your announcement. Oil supplies are pretty tight given that a lot of oil’s come off Venezuela as well. What are your discussions – China said today that the U.S. had reached beyond its jurisdiction. What have your – what assurances do you have from Saudi Arabia, the UAE, to supply the market in a timely fashion?
And second, do you believe that, I think it’s the five largest importers of Iranian oil, will abide by what you are asking of them?
SECRETARY POMPEO: With respect to your second question, we’ve made clear: If you don’t abide by this, there’ll be sanctions. Right? This is what we’re laying out this morning. We have a requirement and – to conduct these transactions, one almost always needs to participate in the financial markets, and we intend to enforce the sanctions. We don’t lay out sanctions that we don’t have any intention of encouraging countries to cooperate with.
With respect to – I’ll leave others to talk about the details of what the Saudis and the Emiratis have agreed to, but I’ve had conversations, the President has had conversations with these countries, and they have committed to making sure that there is sufficient supply in the markets. And I’m confident that we’ll achieve that. I’m confident that they’ll support this policy that is consistent with their objectives as well.
QUESTION: Sir, you said that you are at zero level today. Is that effective today, or do they --
SECRETARY POMPEO: It’s May 2nd.
QUESTION: May 2nd.
SECRETARY POMPEO: The current waivers expire on May – midnight May 1st, I think it is.
QUESTION: So they’re not getting, like, any grace period beyond May 2nd? That’s it? It all must stop?
SECRETARY POMPEO: There are – there are no – there are no SRE waivers that extend beyond that period, full stop.
QUESTION: And so in the interim, they need to look at other sources like --
SECRETARY POMPEO: That’s right. Look, we’ve always tried – and I think we’ve always been very fair about this – if there is a particular transaction that is incidental – all right, so I don’t want to foreclose the possibility, but there will be no waivers that extend beyond the 1st of May.
—April 22, 2019, to the press
President Donald Trump
Saudi Arabia and others in OPEC will more than make up the Oil Flow difference in our now Full Sanctions on Iranian Oil. Iran is being given VERY BAD advice by @JohnKerry and people who helped him lead the U.S. into the very bad Iran Nuclear Deal. Big violation of Logan Act?— Donald J. Trump (@realDonaldTrump) April 22, 2019
Statement from the Press Secretary on Cooperation between the United States, Saudi Arabia, and the United Arab Emirates on Energy and Iran Policies
President Donald J. Trump has decided not to reissue Significant Reduction Exceptions (SREs) when they expire in early May. This decision is intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue. The United States, Saudi Arabia, and the United Arab Emirates, three of the world’s great energy producers, along with our friends and allies, are committed to ensuring that global oil markets remain adequately supplied. We have agreed to take timely action to assure that global demand is met as all Iranian oil is removed from the market.
The Trump Administration and our allies are determined to sustain and expand the maximum economic pressure campaign against Iran to end the regime’s destabilizing activity threatening the United States, our partners and allies, and security in the Middle East. The President’s decision to eliminate all SREs follows the designation of the Islamic Revolutionary Guard Corps as a Foreign Terrorist Organization, demonstrating the United States commitment to disrupting Iran’s terror network and changing the regime’s malign behavior. We welcome the support of our friends and allies for this effort.
—April 22, 2019
National Security Advisor John Bolton
Coupled with the recent designation of the IRGC as a Foreign Terrorist Organization, today’s announcement should make the United States’ resolve abundantly clear to Tehran. https://t.co/5lrHxlzWU1— John Bolton (@AmbJohnBolton) April 22, 2019
Special Representative for Iran Brian Hook and Assistant Secretary for Energy Resources Francis R. Fannon
QUESTION: One, the Secretary was almost getting there at the end, but just specifically, is there a wind-down period? What kind of wind-down period will there be?
And as you know, with China and Turkey, you’re in the middle of huge strategic conversations with them. Turkey, obviously S-400, F-35. China, the entire trade talks. Do you have – do you believe that this announcement, this move, will impact those larger strategic talks? Thanks.
MR HOOK: You want to do the first one?
MR FANNON: Sure, I’ll speak to the wind-down period. Hi. Yeah, I would say that we’ve – the wind-down period, if we look at it, was – will be a year in terms of going to zero. We’ve been very clear from the outset when the administration initiated its withdrawal from the JCPOA. So that continues. We’ve already taken a million and a half barrels off the market and are finalizing our path to zero, which will end on 2nd May.
We’re doing this purposefully. The Secretary made the announcement today to provide the ability for markets to be managed prior to the expiration. And we’re doing this in close cooperation and consultation with some of the largest producers in the world alongside of the U.S. production. So we feel very confident in terms of – the global oil markets will remain well supplied.
QUESTION: Sorry, one year from May 2nd, you’re saying, or one year from the JCPOA?
MR FANNON: We started this last May, right?
MR FANNON: Well, if we hit that one year this May, so we say the wind-down period was – began then. We’ve been very clear in terms of our path to zero, and we’re pleased to see that global market conditions and cooperation from other partners allow us to close out this year to zero.
QUESTION: No further wind-down period after May 2nd?
MR HOOK: There will be no additional SREs granted. That is the policy.
With respect to the impact, the point of this is not to negatively impact other countries. We have – we are doing everything we can to ensure a well-supplied oil market and that there aren’t any supply interruptions. We have a very well supplied oil market right now. We have always said from the time – this has been a year now, we’ve said this repeatedly, Frank and I have, and the Secretary, the President – we are not looking to grant any exceptions or waivers to our campaign of maximum economic pressure. And this is the only way – this is the biggest leverage we have on the Islamic Republic of Iran, is their oil exports. And if you want to seek a change in behavior, you have to show seriousness of purpose on the oil.
And we’re seeing – I was here a week or two ago giving a briefing on the impact that we are seeing. With this decision today, we expect to see more positive impacts to deny Iran the revenue it needs to conduct its foreign policy, to fund its proxies and satellites around the region, to fund its missile program. And that’s a very positive thing. And so we think that this sort of move pays a lot of benefits for the Middle East broadly to promote peace and stability. It is very hard to imagine a peaceful and stable Middle East if you accept the status quo of Iran’s expansionist foreign policy.
QUESTION: Can I just try --
QUESTION: Can you talk about the --
MR HOOK: Michele.
QUESTION: -- the sanctions that these countries could face? I mean, are you talking about targeted sanctions? Are you talking about sanctions that could affect the U.S. trade relationship with countries like India and China?
MR HOOK: I don’t have anything to add beyond what the Secretary said. We will sanction any sanctionable behavior. We have given countries – after the President announced he was leaving the deal, countries were given a six-month pre-wind-down before the sanctions were re-imposed in November. And then because we had a very tight and fragile oil market in November, the President decided to grant a handful of waivers. We have always wanted to get to zero as quickly as market conditions will permit. We just face a much better oil picture globally than we did six months ago, and it will only improve from here.
MS ORTAGUS: Matt.
MR HOOK: And so that’s why we’re in a better place.
QUESTION: I just want to – I understand you, the Secretary, and the White House also have all said there will be no more SREs granted, the waivers granted. But does that mean – will all of these countries whose waivers are expiring on the 2nd get hit with sanctions on May 3 if they haven’t cut all of their purchases, or is there some kind of leeway in there for them to, let’s say, continue to take delivery of pre – of oil that they purchased before May 2nd before the waivers expire, or will they be able to use money after May 2nd that’s already been set aside for these purchases? I mean, forget about whether the waivers will be continued – are they going to get hit with sanctions starting May 3?
MR FANNON: I think the Secretary spoke to that.
MR HOOK: Yeah, he already spoke to it. We don’t have anything to add beyond what he said.
QUESTION: Well, I – well, he didn’t, actually --
MR FANNON: No, he did.
QUESTION: -- because you keep saying that SREs won’t be – look, I’m not accusing you, I just don’t want this to be, like, you’re playing cute here. Will India, Turkey, Japan, South Korea, all the – China, get hit with sanctions on May 3rd if they do not stop between now and then taking delivery of Iranian oil?
MR HOOK: It’s a hypothetical that the Secretary’s already addressed.
MS ORTAGUS: Kylie, another question.
QUESTION: Can you talk a little bit about the numbers? You said that – excuse me – 1.5 million barrels have been taken off the market. So how many was Iran exporting last year at this time? How many are they exporting now? And the five countries that are still largely importing Iranian oil, how much are they importing?
MR FANNON: Well, we can get – with respect to some of the specific numbers and the 1.5, that’s been – made that – those numbers available publicly in the past. In terms of the specific countries, that’s subject – some of those are subject to ongoing – the diplomatic discussions. There’s plenty of published reporting on – in terms of estimates on what different countries are importing, and we just – we haven’t any further – anything further to comment on those specifically.
I think what – the other point the Secretary underscored was just the tremendous increase in continued uptick in production in the United States, and how EIA continues to have to revise upward almost on a couple-month basis in terms of what U.S. production – what the U.S. production is. Just last year, adding 1.6 million barrels to the market is significant. We’re on trend to – projected to do something along similar this year, so we’re very confident in terms of the overall supply.
I think the other point is global oil stocks are at five-year averages. That’s important. And we’re in a very positive position relative to some of the other producers the Secretary alluded to that are working with us in partnership.
QUESTION: Those prices went up significant today, though. Can you speak to that? Do you expect them to level out later this week?
MR FANNON: We saw some increase, so it’s hard to conflate our announcements – what was made versus other things. I think just a few hours prior you could look at other reporting as to the OPEC curtailment. There’s lots of reasons in terms of what affects oil markets. What we’re here to say also, though, and as the Secretary alluded, we’re having to do it – we’re doing this in coordination with other major producers, and we would refer you to their actions as well. We’re doing this to ensure – in a coordinated way to ensure that the global oil market is well supplied.
State Department Fact Sheet:
Advancing the U.S. Maximum Pressure Campaign On Iran
The United States is not granting any Significant Reduction Exceptions to existing importers of Iranian oil. Maximum pressure means maximum pressure.
· Secretary Pompeo announced his decision not to grant any Significant Reduction Exceptions to existing importers of Iranian oil.
· As the Secretary has said, maximum pressure means maximum pressure. We are fulfilling our promise to get Iran’s oil exports to zero and deny the regime the revenue it needs to fund terrorism and violent wars abroad.
· Targeting Iran’s oil exports is critical because they have historically been the regime’s single largest source of revenue, which it uses to support terrorist proxies, fuel its missile development, and engage in other destabilizing behavior.
· Entities that engage in sanctionable activity involving Iran risk severe consequences. These consequences could include losing access to the U.S. financial system and the ability to do business with the United States or U.S. companies.
· The United States will continue to apply maximum pressure on the Iranian regime until its leaders change their destructive behavior, respect the rights of its people, and return to the negotiating table.
The Trump Administration has imposed the toughest sanctions ever on the Iranian regime. Our pressure is working.
· The announcement today builds on our already historic success.
· Iran’s oil exports have plummeted due to our pressure. Since President Trump announced that we would cease participation in the nuclear deal in May 2018, over 1.5 million barrels of Iranian oil have been taken off the market, reducing the regime’s revenue by billions of dollars.
· Overall, we estimate that our sanctions have denied the regime direct access to more than $10 billion in oil revenue since May. That is a loss of at least $30 million a day, and this is only with respect to the oil.
· In March, Hizbollah leader Hassan Nasrallah publicly appealed for donations for the first time ever. He has been forced to undertake unprecedented austerity measures because the money from Iran is not flowing in as it once did thanks to our unprecedented pressure.
· Iranian proxies in Syria and elsewhere are experiencing a lack of funding from Tehran. Fighters are going unpaid, and the services they once relied upon are drying up. Oil markets are currently well supplied.
· Oil markets are well supplied and oil inventory levels are seasonally strong.
· We have commitments from oil producing countries, including the Kingdom of Saudi Arabia and the United Arab Emirates, to increase oil production to offset reductions in Iranian oil exports.
· Rising Non-OPEC (Organization of the Petroleum Exporting Countries) oil production and sufficient storage levels show that the adjustment to replace Iranian oil exports has been successful.
· The United States and other non-OPEC oil producers have already increased production and replaced Iranian exports, while other major producers have signaled to markets a willingness and ability to increase production to compensate for additional Iranian reductions.
· Non-OPEC output, led by the United States, is forecast to expand by 2.2 million barrels per day in 2019 and 2020, according to the U.S. Department of Energy’s Energy Information Administration (EIA).
· OECD (Organization for Economic Co-operation and Development), including U.S. industry-held, oil stocks remain above 5-year averages, according to the International Energy Agency (IEA). The United States is increasing oil production and exports.
· EIA reported that United States petroleum and other liquids production average over 17 million barrels a day during the first quarter of 2019, making the United States the largest producer of oil and natural gas liquids, supplying more than 19 percent of global production.
· U.S. crude oil production is estimated to have reached 12 million barrels per day in March, up 1.6 million barrels per day compared to a year ago.
· EIA forecasts U.S. crude production will increase by 1.4 million barrels per day within the next year.
· U.S. crude oil exports in January 2019 reached 2.575 million barrels per day, an increase of over 1.2 million barrels per day or 90 percent from the prior year, according to the EIA. U.S. exports help markets to function efficiently.
· The IEA projects U.S. exports will rise sharply through 2021, and the United States will become the second largest oil and petroleum products exporter at around 9 million barrels per day, ahead of Russia and nearly equal to Saudi Arabia.
· The U.S. remains in close and productive consultations with major oil producers, as well as major oil consuming organizations such as the International Energy Agency, which works to assure the global oil market is well supplied.