Last-ditch talks to keep Iran under nuclear limits headed for failure

Iran's top nuclear negotiator Abbas Araqchi and Secretary General of the European External Action Service (EEAS) Helga Schmit attend a meeting of the JCPOA Joint Commission in Vienna, Austria, June 28, 2019. REUTERS/Leonhard Foeger

By John Irish and Francois Murphy

VIENNA (Reuters) – Last-ditch talks to persuade Tehran not to exceed nuclear limits within days were on course for failure on Friday, as Iranian officials said their demands had not been met and Washington rebuffed European calls to ease sanctions to allow negotiations.

A week after Washington called off air strikes just minutes before impact, diplomats say Iran is on course within days to exceed the threshold of enriched uranium allowed under its nuclear deal with world powers, which Washington quit last year.

Any such move would reshape the diplomatic landscape, at a time when European officials are warning that a small mistake on either side could push the United States and Iran to war.

Iranian officials met in Vienna with representatives of the countries that are still party to the nuclear deal — Britain, France, Germany, Russia and China. The Iranians repeated their demand that they be allowed to sell oil.

The talks were a “last chance for the remaining parties … to gather and see how they can meet their commitments towards Iran,” Foreign Ministry spokesman Abbas Mousavi said.

Despite abandoning the deal, Washington has demanded European countries force Iran to continue complying with it. Iran says it cannot do so unless the Europeans provide it with some way to receive the deal’s promised economic benefits.

“For one year we exercised patience. Now it is the Europeans’ turn to exercise patience,” Mousavi said. “They should try to find solutions, practical solutions.”

French President Emmanuel Macron said this week that he would ask U.S. President Donald Trump to ease sanctions to allow negotiations to begin. But the plea seemed to have fallen on deaf ears, with Trump’s Iran envoy saying on Friday sanctions would remain in place to end Iranian oil exports altogether.

“We will sanction any imports of Iranian crude oil… There are right now no oil waivers in place,” Brian Hook, the U.S. Special Representative On Iran, told reporters in London.

European countries, which opposed Trump’s decision to abandon the deal and reimpose sanctions, have promised to find ways to allow Iran access to trade in return for continuing to comply. But in practice, the effort has failed, with major European companies canceling all plans to invest in Iran.

DEADLINES

Iran has set a number of deadlines in recent weeks after which it would cease complying with specific terms of the nuclear deal. The first expired on Thursday, the date Tehran said the quantity of enriched uranium it is holding could exceed the deal’s permissible threshold.

Diplomats in Vienna, headquarters of the U.N. nuclear agency IAEA, told Reuters on Thursday that the latest data from inspectors suggested the threshold had not yet been breached, but it could be as soon as Saturday or Sunday.

Another deadline, when Iran says it could enrich uranium to a purity forbidden under the deal, expires on July 7.

Iran says that if it does exceed thresholds, the steps would be reversible and it still aims to keep the deal in place.

The crisis between Iran and the United States that began with Trump’s withdrawal from the pact has escalated in recent weeks after Washington sharply tightened its sanctions from the start of May to halt all Iranian oil exports.

The Trump administration argues that the 2015 agreement reached under his predecessor Barack Obama was too weak because many terms are not permanent and it excludes non-nuclear issues such as missiles and Iran’s regional behavior. Washington says the aim of sanctions is to force Tehran to renegotiate.

Tehran says there can be no talks as long as sanctions are in place and Washington is ignoring the deal it already signed.

The confrontation took on a military dimension in recent weeks, with Washington blaming Tehran for attacks on ships in the Gulf, which Iran denies. Iran shot down a U.S. drone last week, saying it had entered its air space. Washington said the drone was in international skies, and Trump ordered, then aborted, retaliatory air strikes on Iranian targets.

Any move by Iran that violated the terms of the nuclear deal would put pressure on the Europeans to take sides.

“We will repeat to the Iranians that nuclear issues are not negotiable. We want them to stay in the accord, but we won’t accept them messing us around,” a senior European diplomat said before Friday’s meeting.

The cornerstone of European efforts to placate the Iranians is the creation of INSTEX, a mechanism to use barter to allow some trade that would avoid entanglement in U.S. sanctions.

Almost six months after it was created, it is still not operational and diplomats say it will be able to handle only small volumes for items like medicine, not the large oil sales Iran is seeking.

“If INSTEX fails to meet Iran’s demands within the framework of the nuclear deal, we will take the next steps more decisively,” Mousavi said, adding that “the implementation of the EU’s trade mechanism has been delayed due to some lack of commitments”.

(Additional reporting by Bozorgmehr Sharafedin and Guy Faulconbridge in London and Parisa Hafezi in Dubai; Editing by Peter Graff)

Trump says he aborted retaliatory strike to spare Iranian lives

FILE PHOTO - U.S. President Donald Trump listens to questions from reporters during a meeting with Canada's Prime Minister Justin Trudeau in the Oval Office of the White House in Washington, U.S., June 20, 2019. REUTERS/Jonathan Ernst

By Jeff Mason and Susan Heavey

WASHINGTON (Reuters) – U.S. President Donald Trump said on Friday he aborted a military strike on Iran because he it could have killed 150 people, a disproportionate response to Tehran’s downing of an unmanned U.S. surveillance drone.

Trump said the plan was to hit three sites in response to the drone’s downing on Thursday, which Tehran said took place over its territory and which Washington said occurred in international airspace over the strategic Strait of Hormuz.

The drone incident aggravated fears of a direct military clash between the longtime foes and oil prices rose about $1 per barrel to above $65.50 on Friday due to worries about possible disruptions to crude exports from the Gulf.

In a sign that the United States is also open to diplomacy, Iranian sources told Reuters, Trump had warned them that a U.S. attack on Iran was imminent but saying that he was against war and wanted talks on a range of issues.

In a series of early morning tweets, Trump said he was in no hurry to launch a strike and that U.S. economic sanctions designed to force Iran to curb its nuclear and missile programs and its involvement in regional wars were having an effect.

He also said the United States imposed additional sanctions against Iran on Thursday night following the destruction of the Global Hawk drone by an Iranian surface-to-air missile, but it was not immediately clear what those economic penalties may have been.

“Ten minutes before the strike I stopped it, not proportionate to shooting down an unmanned drone. I am in no hurry, our military is rebuilt, new, and ready to go, by far the best in the world,” Trump tweeted.

White House national security adviser John Bolton, Secretary of State Mike Pompeo and CIA Director Gina Haspel, along with the rest of Trump’s team, favored a retaliatory strike, said a senior Trump administration official.

“There was complete unanimity amongst the president’s advisors and DOD leadership on an appropriate response to Iran’s activities. The president made the final decision,” said the official, who spoke on condition of anonymity.

The purported wreckage of the American drone is seen displayed by the Islamic Revolution Guards Corps (IRGC) in Tehran, Iran June 21, 2019. Tasnim News Agency/Handout via REUTERS

The purported wreckage of the American drone is seen displayed by the Islamic Revolution Guards Corps (IRGC) in Tehran, Iran June 21, 2019. Tasnim News Agency/Handout via REUTERS

TRUMP MESSAGE TO IRAN

Earlier on Friday, Iranian officials told Reuters that Tehran had received a message from Trump warning that a U.S. attack on Iran was imminent but saying that he was against war and wanted talks on a range of issues.

News of that message, delivered through Oman overnight, came shortly after the New York Times reported that Trump had called off air strikes targeting Iranian radar and missile batteries at the last minute.

“In his message, Trump said he was against any war with Iran and wanted to talk to Tehran about various issues,” one of the officials told Reuters, speaking on condition of anonymity.

“He gave a short period of time to get our response but Iran’s immediate response was that it is up to Supreme Leader (Ayatollah Ali) Khamenei to decide about this issue.”

A second Iranian official said: “We made it clear that the leader is against any talks, but the message will be conveyed to him to make a decision.

“However, we told the Omani official that any attack against Iran will have regional and international consequences.”

Khamenei has the last say on all state matters and has ruled out any talks with Washington while Tehran is under sanctions.

Iran shot down the drone after weeks of festering tension amidst a spate of attacks on oil tankers in the Gulf region.

In his initial response on Thursday, Trump said he was not eager to escalate a stand-off with Iran over its nuclear and ballistic missile activities and support for proxies in various Middle East conflicts.

He said the unmanned drone might have been shot down in error by someone who was acting “loose and stupid”, though added: “This country will not stand for it.”

In a sign that the United States may be interested in pursuing diplomacy for now, it asked the U.N. Security Council to meet on Iran behind closed-doors on Monday, diplomats said.

(Additional reporting by Babak Dehghanpisheh in Geneva, Jamie Freed in Singapore, David Shepardson in Washington and Tom Westbrook in Sydney, Tom Balmforth in Moscow, David Alexander, Roberta Rampton, Phil Stewart in Washington, Sabine Siebold in Brussels and Michelle Nichols at the United Nations; Writing by Mark Heinrich and Arshad Mohammed; Editing by Bill Rigby and Alistair Bell)

Iran, U.S. in war of words after U.S. drone shot down

FILE PHOTO: The Northrop Grumman-built Triton unmanned aircraft system completed its first flight from the company's manufacturing facility in Palmdale, California, U.S., May 22, 2013. US Navy/Northrop Grumman/Bob Brown/Handout via REUTERS

By Parisa Hafezi and Phil Stewart

DUBAI/WASHINGTON (Reuters) – Iran on Thursday shot down a U.S. military drone it said was on a spy mission over its territory but Washington said the aircraft was targeted in international air space in “an unprovoked attack”.

The incident fanned fears of wider military conflict in the Middle East as U.S. President Donald Trump pursues a campaign of to isolate Iran over its nuclear and ballistic missile programs and role in regional wars.

It was the latest in an escalating series of incidents in the Gulf region, a critical artery for global oil supplies, since mid-May including explosive strikes on six oil tankers as Tehran and Washington have slid toward confrontation.

Iran has denied involvement in any of the attacks, but global jitters about a new Middle East conflagration disrupting oil exports have triggered a jump in crude prices. They surged by more than $3 to above $63 a barrel on Thursday.

Saudi Arabia, Washington’s main gulf ally, said Iran had created a grave situation with its “aggressive behavior” and the kingdom was consulting other Gulf Arab states on next steps.

“When you interfere with international shipping it has an impact on the supply of energy, it has an impact on the price of oil which has an impact on the world economy. It essentially affects almost every person on the globe,” Adel al-Jubeir, Saudi minister of state for foreign affairs, told reporters in London.

Tensions flared with Trump’s withdrawal last year from world powers’ 2015 nuclear accord with Iran and have worsened as Washington imposed fresh sanctions to throttle Tehran’s vital oil trade and Iran retaliated earlier this week with a threat to breach limits on its nuclear activities imposed by the deal.

U.S. BEEFING UP MIDEAST FORCES

Upping the ante, Washington said on Monday it would deploy about 1,000 more troops, along with Patriot missiles and manned and unmanned surveillance aircraft, to the Middle East on top of a 1,500-troop increase announced after the May tanker attacks.

Iranian state media said the “spy” drone was brought down over the southern Iranian province of Hormozgan, which is on the Gulf, with a locally made “3 Khordad” missile.

A U.S. official said the drone was a U.S. Navy MQ-4C Triton and that it had been downed in international air space over the Strait of Hormuz, through which about a third of the world’s seaborne oil exits the Gulf..

Navy Captain Bill Urban, a spokesman for the U.S. military’s Central Command, said Iran’s account that the drone had been flying over Iranian territory was false.

“This was an unprovoked attack on a U.S. surveillance asset in international air space,” Urban said. The drone, he added, was downed over the Strait of Hormuz at approximately 2335 GMT – in the early morning hours of local time in the Gulf.

The Islamic Republic’s Foreign Ministry insisted the drone had violated Iranian air space and warned of the consequences of such “illegal and provocative” measures.

Independent confirmation of the drone’s location when it was brought down was not immediately available.

A Iranian Revolutionary Guards statement said the drone’s identification transponder had been switched off “in violation of aviation rules and was moving in full secrecy” when it was downed, Iranian state broadcaster IRIB reported.

IRANIAN “RED LINE”

“Our air space is our red line and Iran has always responded and will continue to respond strongly to any country that violates our air space,” Ali Shamkhani, secretary of the Supreme National Security Council, told Iran’s Tasnim news agency.

The MQ-4C Triton’s manufacturer, Northrop Grumman, says on its website that the Triton can fly for over 24 hours at a time at altitudes higher than 10 miles (16 km), with an operational range of 8,200 nautical miles.

The Trump administration sought on Wednesday to rally global support for its pressure on Iran by displaying limpet mine fragments it said came from an oil tanker damaged in the June 13 attacks, saying the ordinance closely resembled mines publicly displayed in Iranian military parades.

European diplomats have said more evidence is needed to pinpoint responsibility for the tanker strikes.

SANCTIONS NOOSE

The U.S. sanctions net draped over Iran, scuttling its oil exports and barring it from the dollar-dominated global finance system, have hammered Iran’s economy, undoing the promise of trade rewards from the 2015 deal to curb its nuclear ambitions.

Trump has sent forces including aircraft carriers, B-52 bombers and troops to the Middle East over the past few weeks. Iran said last week it was responsible for the security of the Strait of Hormuz, calling on American forces to leave the Gulf.

Tehran has also said it will shortly suspend compliance with the nuclear deal’s curbs on its uranium enrichment, meant to block any pathway to nuclear weapons capability, and threatened to disrupt oil shipments through the Strait of Hormuz.

But Trump – who sees the nuclear deal as flawed to Iran’s advantage and requiring renegotiation – and Iranian Supreme Leader Ayatollah Ali Khamenei have both said they have no interest in starting a war.

Heightened U.S.-Iranian tensions have also stoked concerns about increasing bloodshed in countries where Iran and its Saudi-led Gulf Arab regional rivals have long been locked in proxy battles for geopolitical dominance in the Middle East.

(Additional reporting by Asma Alsharif in Dubai and Stephen Kalin in Riyadh; Writing by Parisa Hafezi; Editing by Mark Heinrich)

Tanker attacks in Gulf of Oman fuel security, oil supply fears

An oil tanker is seen after it was attacked at the Gulf of Oman, June 13, 2019. ISNA/Handout via REUTERS

By Lisa Barrington and Rania El Gamal

DUBAI (Reuters) – Attacks on two oil tankers on Thursday in the Gulf of Oman left one ablaze and both adrift, shipping firms said, driving oil prices up 4% over worries about Middle East supplies.

The Front Altair was on fire in waters between Gulf Arab states and Iran after an explosion that a source blamed on a magnetic mine. The crew of the Norwegian vessel were picked up by a vessel in the area and passed to an Iranian rescue boat.

A second Japanese-owned tanker was abandoned after being hit by a suspected torpedo, the firm that chartered the ship said. The crew were also picked up.

The attacks were the second in a month near the Strait of Hormuz, a major strategic waterway for world oil supplies.

The United States and Saudi Arabia blamed Iran for last month’s attacks using limpet mines on four tankers off the coast of the United Arab Emirates, a charge Tehran denies.

There were no immediate statements apportioning blame after Thursday’s incidents.

“We need to remember that some 30% of the world’s (seaborne) crude oil passes through the straits. If the waters are becoming unsafe, the supply to the entire Western world could be at risk,” said Paolo Amico, chairman of INTERTANKO tanker association.

Tensions have risen since President Donald Trump, who has demanded Tehran curb its military programs and influence in the Middle East, pulled the United States out of a deal between Iran and global powers to curb Tehran’s nuclear ambitions.

Thursday’s attacks came as Shinzo Abe – prime minister of U.S. ally Japan, a big importer of Iranian oil until Washington ratcheted up sanctions – was visiting Tehran with a message from Trump. Abe urged all sides not to let tensions escalate.

The Bahrain-based U.S. Navy Fifth Fleet said it was assisting the two tankers on Thursday after receiving distress calls. Britain said it was “deeply concerned” about Thursday’s reported explosions and was working with partners on the issue.

Iranian Foreign Minister Mohammad Javad Zarif described Thursday’s incidents as “suspicious” on Twitter, noting they occurred during Abe’s Tehran visit. The minister called for regional dialogue.

Oman and the United Arab Emirates, which both have coastlines along the Gulf of Oman, did not immediately issue any public comment.

Saudi Arabia and the UAE, both majority Sunni Muslim nations with a long-running rivalry with predominantly Shi’ite Iran, have previously said attacks on oil assets in the Gulf pose a risk to global oil supplies and regional security.

An oil tanker is seen after it was attacked at the Gulf of Oman, June 13, 2019. ISNA/Handout via REUTERS

An oil tanker is seen after it was attacked at the Gulf of Oman, June 13, 2019. ISNA/Handout via REUTERS

EXPLOSION

Bernhard Schulte Ship management said the Kokuka Courageous was damaged in a “suspected attack” that breached the hull above the waterline while transporting methanol from Saudi Arabia to Singapore.

It said the ship was afloat and the crew safe with one minor injury reported.

A shipping broker said the blast that struck the Kokuka Courageous might have been caused by a magnetic mine. “Kokuka Courageous is adrift without any crew on board,” the source said.

Japan’s Kokuka Sangyo, owner of the Kokuka Courageous, said its ship was hit twice over a three-hour period.

Taiwan’s state oil refiner CPC said the Front Altair, owned by Norway’s Frontline, was “suspected of being hit by a torpedo” around 0400 GMT carrying a Taiwan-bound cargo of 75,000 tonnes of petrochemical feedstock naphtha, which Refinitiv Eikon data showed had been picked up from Ruwais in the UAE.

Frontline said its vessel was on fire but afloat, denying a report by the Iranian news agency IRNA that the vessel had sunk.

Front Altair’s 23-member crew abandoned ship after the blast and were picked up by the nearby Hyundai Dubai vessel. The crew was then passed to an Iranian rescue boat, Hyundai Merchant Marine said in a statement.

Iranian search and rescue teams picked up 44 sailors from the two damaged tankers and took them to the Iranian port of Jask, Iran’s IRNA reported.

Thursday’s attacks came a day after Yemen’s Iran-aligned Houthis fired a missile on an airport in Saudi Arabia, injuring 26 people. The Houthis also claimed an armed drone strike last month on Saudi oil pumping stations.

Iranian Supreme Leader Khamenei told Abe during his visit to Iran that Tehran would not repeat its “bitter experience” of negotiating with the United States, state media reported.

“I do not see Trump as worthy of any message exchange, and I do not have any reply for him, now or in future,” the Iranian leader said.

(Reporting by Koustav Samanta and Jessica Jaganathan in Singapore, Liang-Sa Loh and Yimou Lee in Taipei, Terje Solsvik in Oslo, Ghaida Ghantous in Dubai, Hyunjoo Jin in Seoul and Jonathan Saul in London; Writing by Edmund Blair; Editing by Jon Boyle and Alison Williams)

Saudi Arabia says oil facilities outside Riyadh attacked

A technical staff is seen at the Port of Fujairah, United Arab Emirates, May 13, 2019. REUTERS/Satish Kumar

By Stephen Kalin and Rania El Gamal

RIYADH/DUBAI (Reuters) – Saudi Arabia said armed drones had struck two oil pumping stations in the kingdom on Tuesday in what it called a “cowardly” act of terrorism two days after Saudi oil tankers were sabotaged off the coast of the United Arab Emirates.

The energy minister of the world’s largest oil exporter said the attack caused a fire, now contained, and minor damage at one pump station, but did not disrupt oil production or exports of crude and petroleum products.

Oil prices spiked on news of the attack on the stations, more than 200 miles (320 km) west of the capital Riyadh. Brent crude futures rose 1.38% to trade at $71.20 by 1114 GMT.

Energy Minister Khalid al-Falih, in comments run by state media, said the drone attack and Sunday’s sabotage of four vessels, including two Saudi tankers, off Fujairah emirate, a major bunkering hub, threatened global oil supplies.

“These attacks prove again that it is important for us to face terrorist entities, including the Houthi militias in Yemen that are backed by Iran,” Falih said in an English-language statement issued by his ministry.

Houthi-run Masirah TV earlier said the group had launched drone attacks on “vital” Saudi installations in response to “continued aggression and blockade” on Yemen.

A Saudi-led coalition has been battling the Houthis for four years in Yemen to try to restore the internationally recognized government, in a conflict widely seen as a proxy war between Saudi Arabia and Iran.

The Houthis have repeatedly launched drone and missile attacks on Saudi cities, but two Saudi sources told Reuters this was the first time an Aramco facility was hit by drones.

State-run Aramco said it had temporarily shut down the East-West pipeline, known as Petroline, to evaluate its condition. The pipeline mainly transports crude from the kingdom’s eastern fields to Yanbu port, which lies north of Bab al-Mandeb.

The attacks occur amid a war of words between Washington and Tehran over sanctions and U.S. military presence in the region.

The Saudi stock index, which suffered two days of heavy losses, opened 1.5% higher but was trading down 0.3% at 1200 GMT. A Saudi-based banker told Reuters that state funds were supporting local stocks to limit the downside.

IRAN IN FOCUS

The UAE has not revealed details about the nature of the attack on ships near Fujairah port, which lies just outside the Strait of Hormuz, or blamed any party or country.

Iran was a prime suspect in the sabotage on Sunday although Washington had no conclusive proof, a U.S. official familiar with American intelligence said on Monday.

Iran has denied involvement and described the attack on the four commercial vessels as “worrisome and dreadful”. It has called for an investigation.

The U.S. ambassador to Saudi Arabia said Washington should take what he called “reasonable responses short of war” after it had determined who was behind the attacks near Fujairah.

“We need to do a thorough investigation to understand what happened, why it happened, and then come up with reasonable responses short of war,” Ambassador John Abizaid told reporters in the Saudi capital Riyadh in remarks published on Tuesday.

“It’s not in (Iran’s) interest, it’s not in our interest, it’s not in Saudi Arabia’s interest to have a conflict.”

The U.S. embassy in the UAE advised its citizens to maintain a high level of vigilance on heightened tensions in the region.

Washington has increased sanctions on Tehran, saying it wants to reduce Iranian oil exports to zero, after quitting the 2015 nuclear pact between Iran and global powers last year.

The U.S. Maritime Administration said last week that Iran could target U.S. commercial ships including oil tankers sailing through Middle East waterways. Tehran has called the U.S. military presence “a target” rather than a threat.

A fifth of global oil consumption passes through the Strait of Hormuz from Middle East crude producers to markets in Asia, Europe, North America and beyond. The narrow waterway separates Iran from the Arabian Peninsula.

Iran’s Revolutionary Guards threatened last month to close the chokepoint if Tehran was barred from using it.

U.S. President Donald Trump wants to force Tehran to agree a broader arms control accord and has sent an aircraft carrier and B-52 bombers to the Gulf in a show of force against what U.S. officials have said are threats to U.S. troops in the region.

(Additional reporting by Alexander Cornwell, Asma Alsharif, Aziz El Yaakoubi and Davide Barbuscia in Dubai; Writing by Stephen Kalin and Ghaida Ghantous; Editing by Angus MacSwan, William Maclean)

Iran’s Zarif warns U.S. of ‘consequences’ over oil sanctions, Strait of Hormuz

FILE PHOTO: Iranian Foreign Minister Mohammad Javad Zarif speaks during a news conference with Iraqi Foreign Minister Mohamed Ali Alhakim, in Baghdad, Iraq, March 10, 2019. REUTERS/Khalid Al-Mousily/File Photo

By Michelle Nichols and Lesley Wroughton

NEW YORK (Reuters) – The United States must be prepared for consequences if it tries to stop Iran from selling oil and using the Strait of Hormuz, Iran’s Foreign Minister Mohammad Javad Zarif warned on Wednesday, while also offering to negotiate prisoner swaps with Washington.

The United States on Monday demanded buyers of Iranian oil stop purchases by May or face sanctions, ending six months of waivers which allowed Iran’s eight biggest buyers, most of them in Asia, to continue importing limited volumes.

“We believe that Iran will continue to sell its oil. We will continue to find buyers for our oil and we will continue to use the Strait of Hormuz as a safe transit passage for the sale of our oil,” Zarif told an event at the Asia Society in New York.

Reinforcing Supreme Leader Ayatollah Ali Khamenei’s stance, Zarif warned: “If the United States takes the crazy measure of trying to prevent us from doing that, then it should be prepared for the consequences.” He did not give specifics.

Oil prices hit their highest level since November on Tuesday after Washington’s announcement.

When asked if the U.S. pressure campaign on Tehran was aimed at sparking further negotiations or regime change, Zarif said: “The B team wants regime change at the very least.” He described the B Team as including Israeli Prime Minister Benjamin Netanyahu and Trump’s national security adviser John Bolton.

“It is not a crisis yet, but it is a dangerous situation. Accidents … are possible. I wouldn’t discount the B team plotting an accident anywhere in the region, particularly as we get closer to the election. We are not there yet.”

Zarif suggested possible cooperation with the United States to bring stability to Iraq and Afghanistan, a priority for both Tehran and Washington.

He also said he was willing to swap British-Iranian aid worker Nazanin Zaghari-Ratcliffe, who has been detained in Iran since 2016, for an Iranian woman detained in Australia for the past three years on a U.S. extradition request.

“I feel sorry for them, and I have done my best to help,” Zarif said of Zaghari-Ratcliffe. “But nobody talks about this lady in Australia who gave birth to a child in prison. … I put this offering on the table publicly now – exchange them.”

Zarif then went on to say that Iran had told the U.S. administration six months ago that it was open to a prisoner swap deal, but had not yet received a response.

“All these people that are in prison inside the United States, on extradition requests from the United States, we believe their charges are phony. The United States believes the charges against these people in Iran are phony. Let’s not discuss that,” he said.

“Let’s have an exchange. I’m ready to do it and I have authority to do it,” Zarif said.

(Reporting by Michelle Nichols and Lesley Wroughton; Editing by Chizu Nomiyama and Jonathan Oatis)

Iran’s Khamenei calls for unity, warns of U.S. plots in 2019

FILE PHOTO: A display featuring missiles and a portrait of Iran's Supreme Leader Ayatollah Ali Khamenei is seen at Baharestan Square in Tehran, Iran September 27, 2017. Picture taken September 27, 2017. Nazanin Tabatabaee Yazdi/TIMA via REUTERS

DUBAI (Reuters) – Supreme leader Ayatollah Ali Khamenei urged Iranians on Wednesday to stay united, saying the United States would exploit divisions and was likely to launch plots against Iran in 2019.

Iran is struggling with the economic impact of President Donald Trump’s decision to pull out of a 2015 nuclear deal between Iran and six major powers and re-impose sanctions.

“Everyone should be vigilant, because our enemy America is sly and evil … and may have plans for 2019,” Khamenei said in a speech, the text of which was posted on his website. “But we are stronger than them and they will fail as they have in the past.”

The rial currency has lost about 60 percent of its value in 2018, as Iranians have increasingly sought dollars and gold coins to protect their savings. Factional tensions and worker protests have been on the rise as the sanctions have spurred inflation and unemployment.

“My advice to the Iranian nation, especially the youth and the country’s various organizations, professional or political, is to be careful and not make matters easier for the enemy,” Khamenei said.

Iran has accused the United States, Israel, regional rival Saudi Arabia and government opponents living in exile, of fomenting unrest.

(Reporting by Dubai newsroom; Editing by Robin Pomeroy)

Trump support for Saudi prince leaves Turkey with tough choices

FILE PHOTO: Saudi Arabia's Crown Prince Mohammed bin Salman arrives at Ministro Pistarini in Buenos Aires, Argentina, November 28, 2018. Argentine G20/Handout via REUTERS

By Orhan Coskun and Dominic Evans

ISTANBUL (Reuters) – Eight weeks since the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul, U.S. President Donald Trump’s unwavering support for the kingdom’s powerful crown prince has left Turkey in a bind.

The longer it confronts Saudi Arabia over who exactly ordered the operation, the more it risks looking isolated as other countries put aside their misgivings and return to business with the world’s biggest oil exporter.

A prolonged standoff with Riyadh could also jeopardize Turkey’s own fragile rapprochement with Washington if it forces Trump to choose sides between the rival regional powers.

Turkey’s dilemma comes to a head this week at the G20 summit of the world’s main economies, where President Tayyip Erdogan and Saudi Arabia’s Crown Prince Mohammed bin Salman could meet, according to Turkish officials.

Without naming him, Erdogan has repeatedly suggested the prince has questions to answer over the killing, while one of his advisers has said bluntly that Saudi Arabia’s de facto ruler has Khashoggi’s blood on his hands.

But Erdogan has avoided talking about Khashoggi’s death in recent speeches, raising questions about whether he may soften his stance towards the 33-year-old heir to the throne who could be running Saudi Arabia for several decades to come.

“A meeting may take place. A final decision has not been made yet,” a senior political source said, shortly before Erdogan’s departure for the summit in Argentina.

“Saudi Arabia is an important country for Turkey … Nobody wants relations to sour because of the Khashoggi murder.”

Erdogan has good relations with the Saudi monarch, King Salman, but ties have been strained by recent Saudi moves including the blockade of Qatar, championed by Salman’s son.

Analysts say Erdogan sees Saudi assertiveness under the prince as challenging Turkey’s influence in the Middle East.

FILE PHOTO: A woman takes part in a protest opposing the visit of Saudi Arabia's Crown Prince Mohammed bin Salman in Tunis, Tunisia, November 27, 2018. REUTERS/Zoubeir Souissi/File Photo

FILE PHOTO: A woman takes part in a protest opposing the visit of Saudi Arabia’s Crown Prince Mohammed bin Salman in Tunis, Tunisia, November 27, 2018. REUTERS/Zoubeir Souissi/File Photo

It was the steady drip of evidence from Turkish officials – furious over what they said was a gruesome and carefully planned assassination in their country – which fuelled global outrage at Saudi Arabia and Prince Mohammed.

Erdogan said the hit was ordered at the highest levels of Saudi leadership, and the CIA assessed the prince was directly behind it, despite vehement Saudi denials.

But nearly two months since Khashoggi was killed and his body dismembered by a team of 15 Saudi agents, Western powers have taken little action against Saudi Arabia, a big buyer of Western arms and a strategic ally of Washington.

The most concrete U.S. step so far was a decision in mid-November to impose economic sanctions on 17 Saudi officials, including the prince’s senior aide, Saud al-Qahtani.

Meanwhile, Trump has stood by the crown prince, saying he does not want to jeopardize U.S. business and defying intense pressure from lawmakers to impose broader sanctions on Saudi Arabia.

SECOND THOUGHTS?

On Wednesday, U.S. Secretary of State Mike Pompeo and Defense Secretary Jim Mattis said there was no direct evidence connecting Prince Mohammed to Khashoggi’s murder, and that any downgrading of U.S.-Saudi ties in response would hurt U.S. security.

That clear message from the Trump administration may be forcing Turkey to think again.

“Initially the objective was to pressure Trump to drop his relationship with MbS,” said Sinan Ulgen, a former Turkish diplomat and analyst at the Carnegie Europe think tank, referring to the crown prince.

“On the contrary, Trump seems to have decided to consolidate that relationship, and that’s why there had to be a reassessment in Ankara about how to manage this,” he said.

Ulgen said Erdogan’s priority was to safeguard the modest recovery in relations with Washington since a Turkish court last month freed a U.S. pastor who had been detained for two years on terrorism charges.

“Turkey doesn’t want to endanger the political capital that it earned in Washington by pushing too far (on Khashoggi). That’s the main motivation,” he said.

Bolstered by Trump’s support, Saudi officials have insisted that Prince Mohammed did not know in advance about the operation, and Foreign Minister Adel Jubeir said last week Turkish authorities had told Saudi officials that they were not accusing the crown prince of involvement.

Saudi Arabia’s official news agency said trade ministers from the two countries met in Istanbul on Wednesday and would encourage Saudi investment in Turkey, and Turkish companies to take part in projects in Saudi Arabia.

Any change in Turkey’s approach would likely be gradual. Erdogan made no mention of Saudi Arabia when he spoke to reporters as he left Istanbul airport on Wednesday night, but he may still choose not to meet the prince in Argentina.

“Saudi Arabia has yet to make a satisfactory statement regarding the murder in Istanbul,” said Ilter Turan, a professor of political science at Turkey’s Bilgi University.

“The Turkish government is still working on the investigation … It’s possible to say that it’s a little too early for a meeting.”

Another Turkish official said the government was still assessing the Saudi request for a meeting. If the two men do hold talks in Buenos Aires, the conversation would be broadly the same as the phone call they held a month ago, he said.

“Turkey will repeat its current position at the meeting if there is one,” the official said. “Turkey wants all those responsible for the murder to be brought to justice, and it’s not asking for a punishment for Saudi Arabia.”

“It’s not realistic to expect a major improvement from that meeting, but a contact will have been made”

(Additional reporting by Tulay Karadeniz; Editing by Giles Elgood)

Iranian oil: 40 years of revolution, war, sanctions and bans

FILE PHOTO: A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Persian Gulf, Iran, July 25, 2005. To match Exclusive OPEC-OIL/ REUTERS/Raheb Homavandi/File Photo/File Photo

By Amanda Cooper

LONDON (Reuters) – Nearly 40 years after the 1979 Islamic revolution saw the exit of Western oil companies from Iran, the Iranian oil sector faces yet another costly disruption after a series of interruptions from war, sanctions and diplomatic isolation.

Washington will reapply sanctions to Iran’s oil sector on Nov. 4, after ending its participation in an international deal governing Iran’s nuclear sector. Iran’s oil buyers outside the United States will stop or reduce purchases because of secondary sanctions applied on foreign companies that use the U.S. banking system.

Having lifted a self-imposed revolutionary ban on foreign investors in 1995, Iran has struggled to attract external investment for any sustained period.

The isolation caused by poor relations with the United States and, in recent years, Tehran’s efforts to develop a nuclear capability have prevented Iran building output capacity.

But huge reserves run by the National Iranian Oil Co have helped it cling to its position as one of the world’s five largest oil producers.

The United States stopped buying Iranian oil or investing in Iran’s oil industry in 1979 and has not resumed since.

Iran produces nearly 4 percent of the world’s daily oil supply and over the last 30 years has exported on average two-thirds of that.

The mid-1970s were the heyday of the Iranian oil sector when its output accounted for 10 percent of global production.

It has never returned to the record 6 million barrels per day (bpd) it pumped in 1974.

In that year it pumped 70 percent of the amount produced by OPEC’s biggest producer, its regional political rival Saudi Arabia, and more than three times as much as its neighbor Iraq.

In 2012, when a first round of international nuclear sanctions was imposed, Iran’s output was only a third of Saudi Arabia’s, rising to 41 percent last year and just a little higher than Iraq’s.

Output dropped to a low of 1.5 million bpd in 1980, the year after Shah Mohammed Reza was overthrown, an event that caused the second oil shock across the economies of the West.

It took 23 years for Iran to restore 4 million bpd in 2003, with a post-revolutionary peak last year just short of 5 million bpd of crude and condensate combined

Iran’s exports halved during the depths of the 2012-2016 international sanctions on its nuclear program.

It is unclear what proportion of Iranian crude sales will vanish from international markets after Nov. 4. The United States said on Friday it would temporarily spare from sanctions eight jurisdictions that import Iranian oil. The European Union would not be one of the eight, U.S. Secretary of State Mike Pompeo said.

This isn’t Iran’s first round of sanctions. It has devised ways to export oil under the radar, evading detection by switching off the transponders of its fleet of nearly 40 supertankers, using alternatives to the U.S. dollar for payment, or selling crude to private refiners, in small, harder-to-track parcels

(Reporting by Amanda Cooper; Editing by Richard Mably and Dale Hudson)

China defies U.S. pressure as EU parts ways with Iranian oil

A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Persian Gulf, Iran, July 25, 2005. REUTERS/Raheb Homavandi/File Photo

By Chen Aizhu and Florence Tan

BEIJING/SINGAPORE (Reuters) – China, seeking to skirt U.S. sanctions, will use oil tankers from Iran for its purchases of that country’s crude, throwing Tehran a lifeline while European companies such as France’s Total are walking away due to fear of reprisals from Washington.

The United States is trying to halt Iranian oil exports in an effort to force Tehran to negotiate a new nuclear agreement and to curb its influence in the Middle East.

China, which has cut imports of U.S. crude amid a trade war with Washington, has said it opposes unilateral sanctions and defended its commercial ties with Iran.

On Monday, sources told Reuters Chinese buyers of Iranian oil were beginning to shift their cargoes to vessels owned by National Iranian Tanker Co (NITC) for nearly all their imports.

The shift demonstrates that China, Iran’s biggest oil customer, wants to keep buying Iranian crude despite the sanctions, which were reimposed after the United States withdrew in May from a 2015 agreement to halt Iran’s nuclear program.

“The shift started very recently, and it was almost a simultaneous call from both sides,” said one source, a senior Beijing-based oil executive, who asked not to be identified as he is not allowed to speak publicly about commercial deals.

Tehran used a similar system between 2012 and 2016 to circumvent Western-led sanctions, which had curtailed exports by making it virtually impossible to obtain shipping insurance for business with Iran.

Iran, OPEC’s third-largest oil producer, relies on sales of crude to China, Japan, South Korea, India and the EU to generate the lion’s share of budget revenues and keep its economy afloat.

The United States has asked buyers of Iranian oil to cut imports from November. Japan, South Korea, India and most European countries have already slashed operations.

French oil major Total, previously one of the biggest European buyers of Iranian oil, has said it had no choice but to halt imports and abandon Iranian projects to safeguard its operations in the United States.

On Monday, Iranian Oil Minister Bijan Zanganeh said Total had officially left Iran’s South Pars gas project.

Total later confirmed it had notified the Iranian authorities of its withdrawal from South Pars after it failed to obtain a waiver from U.S. sanctions.

Iranian officials had earlier suggested China’s state-owned CNPC could take over Total’s stake and Zanganeh said the process to replace the French company was under way.

“As for the future of Total’s share, we have not been informed of an official CNPC position, but as we have always said, CNPC, a Chinese state-owned company, has the right to resume our participation if it decides so,” Total said in an emailed statement.

WALK AWAY

French President Emmanuel Macron has repeatedly called for safeguarding the Iranian nuclear deal and defended the interests of EU companies in Iran.

But most European companies have conceded that they would be forced to walk away from Tehran for fear of sanctions and losing access to operations that require U.S. dollars.

The first round of U.S. sanctions, which included cutting off Iran and any businesses that trade with it from the U.S. financial system, went into effect on Aug. 7.

A ban on Iranian oil purchases will start in November. Insurers, which are mainly U.S.- or European-based, have begun winding down their Iranian business to comply with the sanctions.

To safeguard their supplies, state oil trader Zhuhai Zhenrong Corp and Sinopec Group, Asia’s biggest refiner, have activated a clause in long-term supply agreements with National Iranian Oil Corp (NIOC) that allows them to use NITC-operated tankers, four sources with direct knowledge of the matter said.

The price for oil under the long-term deals has been changed to a delivered ex-ship basis from the previous free-on-board terms, meaning Iran will cover all costs and risks of delivering the crude as well as handling the insurance, they said.

In July, all 17 tankers chartered to carry oil from Iran to China were operated by NITC, according to shipping data on Thomson Reuters Eikon. In June, eight of 19 vessels chartered were Chinese-operated.

Last month, those tankers loaded about 23.8 million barrels of crude oil and condensate destined for China, or about 767,000 barrels per day (bpd). In June, the loadings were 19.8 million barrels, or 660,000 bpd.

In 2017, China imported an average of 623,000 bpd, according to customs data.

Sinopec declined to comment. A spokesperson for Nam Kwong Group, the parent of Zhenrong, declined to comment.

NIOC did not respond to an email seeking comment. An NITC spokesman said it would forward a request from Reuters for a comment to the country’s Ministry of Culture and Islamic Guidance.

It was not immediately clear how Iran would provide insurance for the Chinese oil purchases, worth some $1.5 billion a month. Insurance usually includes cover for the oil cargoes, third-party liability, and pollution.

(Additional reporting by Parisa Hafezi in Ankara and Cyril Altmeyer in Paris; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)