US sanctions against Iran’s fuel exports will begin with a softer blow this week, as countries that have been granted waivers will still be allowed to import Iranian crude oil.
Washington has granted temporary waivers to key buyers, after announcing on Friday it will temporarily allow the top eight importers to buy Iranian oil. The US has still not named which eight coutnries would be temporarily exempt.
Previously, China, India and South Korea have been the top importers of Iran’s oil, along with Turkey, Italy and occasionally Taiwan. Analyst predict India, China and South Korea are likely to be among the eight granted the waivers.
Oil markets have been preparing for the sanctions for months. India's economy has already been affected by the sanctions. The Indian rupee was at 72.7650 to the dollar on Monday, down from its previous close of 72.44.
Trade tensions easing between China and the US have seen the rupee gain the most in years, analysts predict the rupee is unlikely to fall sharply as it is expected to take comfort from soft crude prices.
Oil prices under pressure
The Abu Dhabi National Oil Company (ADNOC) said on Sunday it has plans to increase its oil production capacity to 4 million bpd by the end of 2020 and 5 million bpd by 2030, compared with current output of just over 3 million bpd
Brent crude futures were at $72.40 per barrel on Monday, down 43 cents, or 0.6% from their last close.
US West Texas Intermediate (WTI) crude futures were down 46 cents, or 0.7%, at $62.68 a barrel.
Brent has lost more than 16 % in value since early October, while WTI has declined by more than 18 % since then.
Analysts say Iranian exports have shown a decline of more than 1 million barrels per day (bpd) as of October from May.