US State Department may waive Iran sanctions for China

A report by POLITICO that the State Department may plan to grant new waivers to China allowing for current sanctions on Iranian oil to be bypassed.

The current US maximum-pressure policy has been to end all waivers and insist on zero importation of Iranian oil by all of its trade partners. However, this tactic may have reached the limits of what US soft pressure can coerce other nations to accept.

China has received Iranian oil tankers as recently as June, despite the Trump administration ending sanctions waivers in May.

Likewise, while Prime Minister Modi of India told President Trump that India had reduced Iranian oil imports at the G20 conference, the Indian Minister of State stated on Wednesday that there were no plans to discontinue said trade and that it would be sustained at current levels, where it amounts to 11% of India’s energy supply.

The possibility that China, whose economic balance requires cheap energy imports, might openly defy US sanctions is worrying to a US economy that relies more on the threat than the effect.

According to POLITICO’s sources, the State Department is thus considering allowing such oil imports as “payment in kind” to Chinese oil company Sinopec, under an Obama-era law.

Sinopec holds investments in Iran, for which oil shipments could be defined as repayment in place of currency transfers.