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The evolution (or not) of Iran sanctions

Iranian oil facility
Kharg Island Oil Terminal, home to 95% of Iran's crude oil exports. Photo: Fatemeh Bahrami/Anadolu Agency via Getty Images

Oil prices are heading downward this morning, as traders respond to the escalating trade war with China, reopened Libyan exports terminals, and fresh signs that the U.S. could provide buyers of Iran crude oil some wiggle room on sanctions, per Reuters.

The intrigue: U.S. Secretary of State Mike Pompeo seemed to make news yesterday when he said in Abu Dhabi that the U.S. would "consider" waiver requests from a "handful" of countries. But that was in the context of generally tough remarks.

Yes, but: Markets moved, even though it's still unclear whether he went beyond State Department official Brian Hook's July 2 comments, which stated that while the U.S. is not looking to grant waivers, it would work with countries that are reducing imports on a "case by case" basis.

  • I touched base with three analysts — one interpreted Pompeo's remarks as a "marginal softening," while two others saw no change from Hook's comments.
  • To muddy the waters, Hook and Pompeo both seemed more open to some waivers than what an unnamed State official said on background on June 26, so... ¯\_(ツ)_/¯

Quoted: Hedgeye Risk Management's Joe McMonigle doesn't see wiggle room, noting State officials have spent weeks telling foreign leaders they expect full compliance.

"The President is focused on cutting off Iran's oil revenues and that is the U.S policy. I doubt there are any countries with whom the U.S. has met that still believe they will be provided an exception to the policy."
— McMonigle via email

Meanwhile: "U.S. government teams spent three days in Saudi Arabia discussing ways to cut off money flows to Iran without disrupting energy markets as Washington presses nations to stop buying Iranian oil by Nov. 4," Bloomberg reports.

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