EU Undeterred by Sanctions

The US government aims to slash Iran's oil exports when sanctions resume in November. The latest US stance came as the remaining parties to the international nuclear deal with Iran reiterated their commitment to continuing Iran's oil and gas exports, despite the American sanctions, the foreign ministers of the EU, France, Germany and the UK said on Monday in a joint statement.

The deal, known as the Joint Comprehensive Plan of Action, includes China, Iran and Russia as well as the joint statement signatories. The EU's so-called "blocking statute," designed to nullify US legal action against European firms, entered into force on Tuesday to coincide with the first batch of reimposed US sanctions, Platts reported.

Europe is a key outlet for Iran's oil, taking around 700,000 bpd, or more than a quarter, of its crude exports. A number of European companies have also signed agreements to help Iran develop its oil and gas sector.

These activities have been placed in doubt by US President Donald Trump's decision in May to withdraw from JCPOA and reimpose sanctions targeting Iran's oil and gas sector.

The statute enables EU companies to seek damages related to US sanctions and prevents any foreign court rulings based on them from having an effect in the EU. But EU sources said the blocking statute cannot fully protect EU companies dealing with Iran from the impact of US sanctions, only mitigate them.

Indeed, most European refiners have already started to wind down their purchases of Iranian crude as legal risks escalate, banks back away from financing deals and tanker rates to Iran soar. The EU set up a specific EU-Iran Working Group earlier this year to look at oil-related sanctions issues, including revenue transfers, storage and shipping, including access to tankers to ports.

"We are trying to find the best way to maintain Iranian oil exports," an EU source said.

The group is also looking at reinsurance for refineries potentially exposed to the US sanctions, insurance and reinsurance for cargo transport and machinery, and protection and indemnity insurance. Iranian President Hassan Rouhani said on Monday that some major customers would not be deterred by US sanctions.

"The Chinese and Russians have explicitly said that they will comply with their commitments and implement their contracts," he said in a televised speech. "As you saw that in Total's contract, when it quit the project, China stuck to the deal. Our relations are good with India. Asian countries are of high importance for us."

Rouhani said Iran would soon send delegations to oil exporters in the region to discuss the sanctions.