Turkey's biggest oil importer, TÜPRAŞ, is in talks with U.S. officials to obtain a waiver allowing it to keep buying Iranian oil after Washington reinstates sanctions on Iran's energy sector in November, industry sources told Reuters.
The United States is preparing to impose the new sanctions on Iran's oil industry after Washington withdrew from a nuclear deal between Tehran and other global powers earlier this year, but is also considering offering waivers to some allies that rely on Iranian supplies.
TÜPRAŞ has cut back purchases of Iranian crude since May, when the United States said it would re-impose sanctions on Tehran, and analysts said TÜPRAŞ is likely to stick to lower volumes in coming months.
The United States is due to re-instate sanctions on Iran's energy sector after a wind-down period ends on Nov. 4.
Turkey depends heavily on imports to meet its energy needs and neighboring Iran has been one of its main sources of oil because of its proximity, the quality of its crude and favorable price differentials.
Turkey has already made efforts to cut its purchases ahead of the U.S. sanctions, but would prefer to keep up some level of Iranian oil imports past November, an industry source familiar with the matter said.
"They would like to be able to continue importing 3-4 cargoes a month, like they did during the previous sanctions round," the source said.
Meanwhile, sources previously said that during the sanctions scheme of 2011 by the U.S., TÜPRAŞ was able to purchase 3 to 4 cargoes of Iranian crude a month and that they would want to be able to stick to that this time as well instead of completely stopping.
Turkey imported around 97,000 barrels per day (bpd) of Iranian oil in August and 133,000 bpd in September, compared with just over 240,000 bpd in April, tanker tracking and shipping data showed.
And in the first two weeks of October, Turkey has purchased three 1 million barrel-cargoes of Iranian oil - a level that would equate to about 97,000 bpd if it made no other purchases this month.
Asked if Washington was negotiating with Turkey for a waiver, a State Department official said the department was prepared to work with countries that are reducing their imports on a case-by-case basis.
On Monday, Brian Hook, the U.S. special representative on Iran, did not comment directly about any talks on waivers with Turkey. But he told reporters countries seeking sanctions relief must "explain their specific and unique circumstances."
Hook said those conversations were private, but he added the State Department was "trying to advance our national security goals and also taking into account the needs of our allies and partners around the world." Refiners around the world are under pressure to avoid Iranian oil purchases because they want to maintain their access to the U.S. financial system - something they could lose if they flout the U.S. sanctions. Indian refiners also cut imports of Iranian oil purchases last month in a sign they are preparing for November.
Washington's plan to impose sanctions on Iranian crude could strain already soured ties between Ankara and Washington. Turkey has been vocally opposed to the U.S. sanctions on Iran and has said it will not cut trade ties with Tehran at the behest of other countries.
During 2017, Iran was Turkey's top crude oil source, accounting for 11.5 million tons of its total purchases nearing 26 million tons, followed by Iraq and Russia.
On May 8, President Trump pulled the U.S. out of a 2015 nuclear pact with Iran reached by his predecessor Barack Obama and other world powers, the U.K., France, China, Russia and Germany, and ordered tough U.S. sanctions on Tehran.