Can Oil Sanctions Exemptions Guarantee Iran's Oil Exports?

According to the latest report from Reuters and based on customs statistics analysis, South Korea has not imported any oil from Iran for the third consecutive month in November this year, despite the fact that this country was previously exempted from sanctions against Iran's oil sector. This was not surprising as China's oil purchases from Iran also reached their lowest level since the nuclear agreement in October of this year. According to Reuters, China's oil imports from Iran in October showed a nearly 64 percent decrease compared to the same period last year. This fluctuation in Iran's oil exports - despite significant discounts on Iranian oil prices - has also been experienced with other countries. The fundamental question is whether oil sanctions exemptions can guarantee Iran's oil exports? And why do countries like South Korea reduce or stop their oil imports from Iran despite being exempt from sanctions? It should be noted that any political and economic action related to the oil market has various consequences for oil market players. However, these consequences differ in terms of quality and quantity of impact and are not uniform. In this context, sanctions and the implementation of a 180-day oil exemption for eight countries (Turkey, Taiwan, South Korea, Italy, Greece, China, India, and Japan) have undeniable consequences for the oil market, the exempted countries, and Iran's sovereignty, as well as Iran's rival countries. Following the announcement of U.S. oil sanctions exemptions against Iran's government, various interpretations were presented to explain it. Some considered the motivation for these exemptions to be political, while others deemed it economic. However, U.S. officials later explicitly stated that the main reason for the oil exemption was to prevent shocks in the oil market and to avoid price increases in the oil market. Otherwise, if oil prices in global markets had risen, the U.S. efforts to reduce Iran's oil revenues would have been in vain. This was certainly not desirable for the American sanctioners since, otherwise, the loss from reduced Iranian oil exports would be compensated by rising crude oil prices. Iran, under the pressure of oil sanctions, is committed to a strategy of minimum exports and maximum prices. In contrast, the U.S. government is trying to impose a strategy of minimum exports and the lowest oil prices on Iran, as it seeks to maximize losses for the Iranian regime at the minimum cost for itself and its allies. The reason some countries do not utilize their exemptions despite having them is that further exemptions are relevant for countries that do not have high risk tolerance and cannot quickly seek to replace Iranian exporters. However, it seems that South Korea does not have such a situation. South Korea, which has a relatively stable economy, does not want to rely on Iran for its energy source - even under oil exemptions - and bear costs such as future uncertainties, especially since replacing Iran with another country is also time-consuming and has management costs. Until now, South Korea was one of Iran's good and reliable customers. South Korea, with its high purchasing power - unlike countries like India - could pay its debts well. Furthermore, the Koreans were even willing to use their national currency to pay Iran, and such negotiations between South Korean and Iranian officials had yielded results. South Korea also had advantages in barter transactions compared to countries like India and China, as it is one of the major exporters of industrial goods and raw materials and spare parts to Iran. Despite these advantages, it seems that South Korea is not very interested in importing oil from Iran. Therefore, it prefers to import its required oil from Iran's oil rivals such as Saudi Arabia and the United Arab Emirates. The active presence of Iran's oil rivals in the oil market, especially under current conditions, is one of the important reasons for South Korea's reduced imports from Iran. It is natural that if South Korea had no alternative exporters for oil imports, it would have made more use of those exemptions. However, given the current oil market situation of reduced demand and U.S. recommendations to South Korea, there is a greater incentive for Iran's rivals and South Korea to increase their cooperation and replace oil from other countries with Iranian oil. Such actions are not limited to South Korea alone. Therefore, it should be expected that as the time approaches for the expiration of oil import sanctions exemptions from Iran, Iran's customers will seek to replace oil from other countries with Iranian oil.