Fearing U.S. sanctions on Tehran, Sri Lanka stops importing Iranian crude oil

September 18, 2018

In anticipation of new U.S. sanctions against Tehran, Sri Lankan energy officials said Tuesday the South Asian nation has stopped importing Iranian crude oil.

“We stopped as soon as the sanctions were announced,” Sri Lankan petroleum resources development minister Arjuna Ranatunga was quoted as saying in Abu Dhabi’s leading English language newspaper, The National. “We didn’t buy [directly] from Iran. We buy from Singapore, Dubai, Fujairah.”

The move is the latest global reaction to the Trump administration’s effort to kill Tehran’s oil exports in the wake of Washington withdrawing from multilateral 2015 nuclear agreement with Iran last May.

While the U.S. has already reimposed some finical penalties against Tehran, in early November major sanctions kick in aimed at punishing countries who buy Iranian oil by blocking their access to U.S. markets and financial institutions.

The aggressive Trump administration measures have proven extremely effective, energy analysts said, with data showing that Iranian oil exports have plunged about 35 percent since April.

One of South Asia’s smaller oil consumers, Sri Lanka, had been importing nearly all of its 50,000 barrels per day from Iran.

Following earlier threats about the oil sanctions on Tehran, Sri Lanka’s state oil company had considered sidestepping the penalties by paying for its crude imports with tea, according to local reports.

Sri Lanka is the world’s second-largest tea producer after Kenya.

Iran, a massive tea consumer, imports 90 percent of the commodity from India and Sri Lanka.

Colombo, however, wanted to ensure it didn’t fall afoul of Washington, Mr. Ranatunga said, The National reported.

He also declined to comment on where the new Sri Lanka oil imports will come from.

South Asia’s largest importer of Iranian crude, India, has also recently announced its refiners will cut their monthly imports from Tehran for September and October by nearly half from earlier this year.

India is Iran’s second-largest oil client behind top buyer China.

Although officials in New Delhi have said they do not recognize Washington’s reimposed sanctions, they have also been working to secure waivers from the Trump administration to avoid penalties, in addition to curbing their reliance on Iranian crude.

Update hourly