US refiners get rare chance to buy Iranian crude again

The Trump administration has temporarily eased some sanctions on Iranian oil, pausing hostilities that have defined US-Iran relations since the 1979 hostage crisis. 

For the first time in almost four decades, American fuelmakers will have the option to buy crude from Iran, after the US Treasury issued a waiver on Iranian oil under the terms of an interim peace deal.

While it is too early to know whether traders and refiners will book tankers to move Iranian crude, the waiver marks a significant break from decades of US economic pressure on Tehran.

The sanctions relief, valid for 60 days, has the potential to alleviate the supply disruptions triggered by the near-closure of the Strait of Hormuz, a vital chokepoint where as much as 20 per cent of global oil supplies flow. 

US-Iran relations have been strained since the 1979 hostage crisis, when Iranian terrorists stormed the US embassy in Tehran and held 52 American diplomats and citizens as hostages.

Over the years, relations soured over Iran’s alleged terrorist activities and its nuclear programme, leading to a total oil embargo in 1995. 

American refineries immediately halted purchases of oil from Tehran after US President Jimmy Carter banned imports.

Volumes that peaked at 850,000 barrels a day in 1977 slumped to zero a few months after the rise of Ayatollah Ruhollah Khomeini, the country’s leader when the hostage crisis unfolded. 

Iranian oil trickled into the US in the years that followed.

The final barrels to enter the US before the 1995 oil embargo went to fuelmakers in Texas, Louisiana and Mississippi.

Chevron Corp and Marathon Petroleum Corp were among the last to import Iranian supplies in 1991, according to Energy Information Administration data.

US refineries imported mostly medium sour oils from Iran, a variety that was scarce at the time. 

When American fuel-makers last imported significant volumes of Iranian oil, the shale boom was still decades away and the Soviet Union was intact, though only months away from collapse.

The US was also a net importer of oil, relying heavily on supplies from OPEC countries. 

US refiners have continued to rely on Middle Eastern oil, even amid the supply disruption caused by the near-closure of the Strait of Hormuz.

Fuel-makers imported about 350,000 daily barrels of Saudi Arabian oil since the war began alongside smaller volumes of Iraqi crude. BLOOMBERG