Secretary of State Mike Pompeo says the United States is not extending any waivers exempting importers of Iranian oil from US sanctions and there will be no grace period for those economies to comply.
The Trump administration said on Monday that it will no longer exempt any countries from US sanctions if they continue to buy Iranian oil, stepping up pressure on Iran in a move that primarily affects the five remaining major importers: China and India and US treaty allies Japan, South Korea, Turkey.
President Donald Trump made the decision as part of the administration's "maximum pressure" campaign on Iran that aims to eliminate all of its revenue from oil exports that the US says funds destabilising activity throughout the Middle East and beyond.
"This decision is intended to bring Iran's oil exports to zero, denying the regime its principal source of revenue," the White House said in a statement.
Announcing the step, Secretary of State Mike Pompeo said no more sanctions waivers would be granted when the current batch expire on May 2, choking off Iranian income that had been more than $50 billion a year.
"The goal remains simply: To deprive the outlaw regime of the funds that it has used to destabilise the Middle East for decades and incentivise Iran to behave like a normal country," Pompeo told reporters at the State Department.
The administration had granted eight waivers when it re-imposed sanctions on Iran in November after Trump pulled the US out of the landmark 2015 nuclear deal.
The waivers were issued in part to give those countries more time to find alternate energy sources but also to prevent a shock to global oil markets from the sudden removal of Iranian crude.
Three of those waivers, for Greece, Italy and Taiwan, are no longer needed because they have all halted their imports of Iranian oil.
But the other five continue to import Iranian oil and had lobbied for their waivers to be extended.
NATO ally Turkey has made perhaps the most public case for an extension, with senior officials telling their US counterparts that Iranian oil is critical to meeting their country's energy needs.
They have also made the case that as a neighbour of Iran, Turkey cannot be expected to completely close its economy to Iranian goods.
"We will no longer grant any exemptions," Pompeo said. "We are going to zero, we're going to zero across the board."
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Left unclear, however, is whether the five countries will face immediate American sanctions if they continue to take delivery of Iranian oil after the waivers expire.
Two senior US officials — Special Representative for Iran Brian Hook and Assistant Secretary of State for Energy Resources — refused to comment on whether any of them would be given additional time to complete purchases made prior to May 2 or allowed to use money already set aside for purchases after that date without penalty.
Both said questions about such provisions were "hypothetical," suggesting that some accommodation may be possible.
US's decision to end sanctions waivers on Iran oil imports will not serve regional peace and stability, said Turkish Foreign Minister Mevlut Cavusoglu.
The #US decision to end sanctions waivers on #Iran oil imports will not serve regional peace and stability, yet will harm Iranian people. #Turkey rejects unilateral sanctions and impositions on how to conduct relations with neighbors. @StateDept @SecPompeo— Mevlüt Çavuşoğlu (@MevlutCavusoglu) April 22, 2019
Turkey rejects unilateral sanctions and interference in how to conduct relations with its neighbours, said Cavusoglu.
China, one of Iran's largest customers, slammed the step, calling it more evidence of US "unilateral sanctions and long-arm jurisdiction." China, which relies on imports for about half of its oil, could present the toughest diplomatic challenge for the US in trying to enforce its sanctions.
Those arguments fell on deaf ears within the administration.
And, Saudi Energy Minister Khalid Al Falih said in a statement that his country would work with other oil producers "to ensure adequate supplies are available to consumers while ensuring the global oil market does not go out of balance."
Iran hawks on Capitol Hill like Sen. Ted Cruz, R-Texas, who had long lobbied for the step, applauded the end of oil waivers.
"This decision will deprive the ayatollahs of billions of dollars that they would have spent undermining the security of the United States and our allies, building up Iran's nuclear and ballistic missile programs and financing global terrorism," he said.
Israel's Prime Minister Benjamin Netanyahu, meanwhile, praised the administration for further tightening sanctions enforcement on Iran, which the Jewish state regards as an existential threat.
He said the move "is of great importance for increasing pressure on the Iranian terrorist regime."
Fannon said the US did not expect any sharp spike in oil prices or any significant reduction in the global supply of oil, given production increases by other countries, including the US itself, Saudi Arabia and the United Arab Emirates.
Kevin Hassett, chairman of the Council of Economic Advisers, although benchmark US crude oil rose 2.4 percent early on Monday after the decision was announced.
Hassett told reporters at the White House he's not concerned that the decision will negatively affect oil prices.
He said US production has risen in recent years by "more than all of Iranian production" so there is adequate capacity should there be a need for oil supplies.
He said the link between oil prices and the US economy has diminished as American oil production has increased.