Washington — Companies that continue to do business with Iran, including oil trades allowed under US waivers, will have to conduct more due diligence after the US designated the Islamic Revolutionary Guard Corps a terrorist group, Secretary of State Mike Pompeo said Monday.
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Pompeo did not say whether the US was prepared to grant new six-month waivers to Iran's top oil buyers when the current exemptions expire in less than a month.
"We'll make that decision in due course as we move toward May 2," Pompeo said during a press briefing in Washington, adding that the IRGC designation adds "clarity around those transactions that create risks for companies not just in Europe but, frankly, all over the world."
Crude oil futures, which were trading higher Monday on the Libya conflict, did not appear to react to Pompeo's announcement. ICE June Brent was trading 47 cents higher at $70.81/b at 1515 GMT, and May NYMEX crude was up 92 cents at $64/b.
In November, the US granted six-month oil sanctions waivers to China, Greece, India, Italy, Japan, South Korea, Taiwan and Turkey. Three of the eight countries have zeroed out their Iranian oil imports, the State Department has said.
Analysts expect most of the major buyers to receive new waivers, but at lower volumes.
Iran exported about 1.64 million b/d of crude and condensate in March, according to data from shipping sources and provisional tanker tracking data S&P Global Platts compiled, down from a recent high of 2.5 million b/d in June, but up from 1 million b/d in November.
Platts Analytics expects Iran's shipments to fall to 950,000 b/d by the third quarter of 2019 and to 800,000 b/d by the next US waiver deadline in November.
The IRGC designation takes effect April 15. Providing material support to a terrorist group is a US criminal offense punished by up to 20 years in prison.
"If you're the general counsel for a European financial institution today, there's more risk," Pompeo said. "It is absolutely the case that the IRGC amounts to a significant piece of the Iranian economy.
"It is also the case that it is sometimes difficult to know whether the IRGC is involved. ... This will require more diligence be done by every business that is considering doing things that are even now second and third orders removed from what you might think of as a traditional connection to the Iranian economy."
In a reciprocal move, Iran's Supreme National Security Council, its highest security body, said it was recognizing the US military as a terrorist group, according to a report published in state-run news agency IRNA.
It said the US move to list IRGC was dangerous and illegal and said the US "will be responsible for the dangerous consequences of this adventurist move."
-- Meghan Gordon, with Aresu Eqbali in Tehran, firstname.lastname@example.org
-- Edited by Valarie Jackson, email@example.com