US Expected To Extend Iran Sanction Waivers

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December 7, 2012 3:08 PM EST

The United States is likely to give India, South Korea, Turkey and other nations another six-month reprieve Friday from financial sanctions because they have cut their oil purchases from Iran, Reuters reported Thursday, citing two U.S. government sources.

Oil shipments by Iran, its main source of foreign exchange, have more than halved in 2012 due to U.S. and European Union sanctions aimed at reining in Tehran's nuclear ambitions, pressuring its rial currency and igniting inflation.

Most of its remaining crude exports flow to energy-hungry Asia, where all of Iran's buyers are expected to eventually receive the waivers to sanctions, known as "exceptions," in exchange for cutting purchases of oil from the Islamic Republic.

Shipping sources, according to Reuters, say Iran's crude exports are set to drop by about a quarter in December from the preceding month to the lowest level since tougher sanctions were imposed this year, representing a loss of about $800 million at current prices.

On June 11, a number of countries, including Taiwan and South Africa, received their first round of reprieves to a sanctions law signed by President Barack Obama a year ago. The waivers are issued by the State Department.

Under the law, banks in countries that buy oil from Iran can be cut off from the U.S. financial system unless the purchases are reduced.

U.S. waivers for China, the top consumer of Iran's oil, and Singapore are due to expire on Christmas, 180 days after they were issued. Both countries are expected to get waiver extensions because they have reduced Iranian oil purchases. Those waivers could also be issued on Friday, one of the government sources and an oil industry source told Reuters.

"There's nothing in the sanctions law that says the U.S. has to wait a full 180 days to announce exceptions for China," said the government source, who asked not to be named because of the sensitive nature of the matter.

Japan and 10 EU countries received six-month sanction reprieves from the United States in September.

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