South Korea will be banned from importing Iranian oil as the United States will no longer grant sanctions waivers to the eight countries, including Korea, that have been allowed to import Iranian crude.
The Washington Post reported on April 21 (local time) that U.S. Secretary of State Mike Pompeo will announce Monday morning that as of May 2, the eight countries will be subject to U.S. sanctions against Iran.
"The goal of the policy is to drive up the costs of Iran's malign behavior and more strongly address the broad range of threats to peace and security their regime presents," a State Department official told the Post.
Washington’s new policy will have a negative impact on the Korean petrochemical industry. The South Korean government has been in talks with Washington on extending the sanctions waivers. South Korea's business community, including the Federation of Korean Industries, also sent a letter to the U.S. assistant secretary of state for energy and resources to ask for an extension of the sanctions waivers. It asked Washington to understand the difficulty Korea has as a non-oil producing country.
Iranian oil is relatively cheaper than that of other countries such as Saudi Arabia. In addition, the naphtha content of Iran's ultralight oil exceeds 70 percent. South Korea has continuously reduced imports of Iranian oil, but in the case of ultra-light crude, Iranian oil still accounts for around 50 percent of the country's total condensate imports.
Yet Washington is taking a strong stand on the matter. The Washington Post said the State Department gave the eight countries enough time to find an energy source that could replace Iranian oil.
The U.S. withdrew its nuclear agreement with Iran in August last year and announced sanctions against Iran on Nov. 5, which calls for a ban on exports of Iranian oil. At that time, South Korea, China, India, Italy, Greece, Japan, Taiwan and Turkey were granted exceptions for 180 days.
Pompeo is set to announce offsets through commitments from other suppliers like Saudi Arabia and the United Arab Emirates, State Department officials told the Post. Trump spoke on Thursday with the UAE's Crown Prince Mohammed bin Zayed al-Nahyan about the issue, the Post reported.