Hurt by Iran sanctions, South Korea asks US for waiver

New sanctions on Iran will harm South Korean companies, the Asian nation has told the US, asking for “maximum flexibility” on its request for a waiver.

South Korea is one of Asia’s biggest customers of Iranian oil, but US introduction of new sanctions against Tehran on November 4 is threatening new shipments.

South Korean Foreign Minister Kang Kyung-wha phoned US Secretary of State Mike Pompeo late Monday to ask for an exemption, the ministry said in a statement.

“Minister Kang requested the US side exert maximum flexibility so that South Korea can secure an exemption to minimize the damage to our companies,” the statement said.

Trump has pledged to bring Iran’s oil exports down to zero, but a tightening market and rallying prices have forced American officials to hint at possible waivers to those customers who cut down on their shipments.

Macron, Zangeneh say Trump behind oil price rally

Iran’s Minister of Petroleum Bijan Zangeneh rejects President Donald Trump’s attack on OPEC, saying the US president himself is behind a surge in oil prices.

On Monday, Pompeo said he had noted Seoul’s position and would continue discussions on the matter, the South Korean statement said.

South Korea is a main customer of Iran’s condensate, an ultra light oil which has a wide range of utilization in the petrochemical industry. International buyers favor the Iranian grade for its rich naphtha yield and its relative cheapness to other condensate grades.

South Korean companies, however, have reportedly cut their purchases in recent months and count on a US waiver to maintain trade with Iran.

South Korea’s Hyundai Engineering & Construction was reported on Monday to have halted $521 million deal to build a petrochemicals complex in Iran. In June, Daelim Industrial cancelled a $2 billion (2.3 trillion won) to renovate and expand a refinery in Isfahan.

However, other top Iranian oil customers – China, India and Turkey – have pledged to continue imports in the face of shrinking supplies.

They are worried by a sharp oil price hike which could seriously damage their economies, especially after Trump’s assurances of sufficient supplies in the market have sounded hollow.

On Monday, Reuters quoted an Indian government source as saying that New Delhi told Washington rising energy costs caused by high oil prices meant cutting Iranian purchases was impossible.

“We have told this to the United States, as well as during Brian Hook’s visit,” the source said. “We cannot end oil imports from Iran at a time when alternatives are costly.”

India is Iran’s second largest oil importer. The US sent State Department’s special representative for Iran Brian Hook to India recently to convince the country into halting Iran imports, but to no avail.

“We have told this to the United States, as well as during Brian Hook’s visit. We cannot end oil imports from Iran at a time when alternatives are costly,” the unnamed source told Reuters.

The news agency said a US diplomat had confirmed the discussions, saying waivers for India and other countries were possible.

Among major clients, Turkey and China have vowed to maintain Iran imports, with the latter raising shipments to record 800,000 barrels per day and promising to buy even more.

Meanwhile, Iranian officials have said the country has contingency plans in place in order to limit any fallout from the US sanctions.

Iran dismisses US ‘bluff’, sees ‘very solid’ oil outlook

Senior officials remain generally optimistic about Iran’s oil production outlook despite looming US sanctions which seek to drain a key source of revenues.

On Sunday, Iran sold 280,000 barrels of crude oil through the country’s domestic bourse for the first time as officials reiterated that US efforts to zero its oil imports would fail.

“Oil exports might have decreased by a few thousand barrels per day, but we have always stressed that even with the sanctions, Iran’s oil exports should not fall by 1 million barrels per day,” Vice President Es’hagh Jahangiri was quoted as saying.