The US has agreed to give sanction waivers to eight countries - including India, Japan, and South Korea - to keep buying oil from Iran after it reimposes sanctions on Tehran on 5 November, Bloomberg reported quoting a senior official.
The US has told India and other countries to cut oil imports from the Gulf nation to "zero" by November 4 or face sanctions.
The administration must maintain a delicate balancing act with the waivers: ensuring the oil market has sufficient supply and avoiding a politically damaging spike in fuel prices, while also ensuring that Iran's government doesn't collect enough revenue that the USA sanctions become irrelevant.
Secretary of State Mike Pompeo has confirmed earlier reports that eight nations will receive exemptions from the reimposed penalties, but refused to name them and said the European Union was not among them.
India and South Korea agreed with the USA on the outline of deals that would allow them to keep importing some Iranian oil, according to Asian officials with knowledge of the matter. "We should wait and see that the USA will not be able to carry out any measure against the great and courageous Iranian nation", Iran's Foreign Ministry Spokesman Bahram Qassemi told IRIB on Friday.
The U.S.is set to impose more sanctions on Iran, specifically the banking and energy sectors, which will be in effect starting Monday.
Global benchmark Brent crude has fallen about 15 percent from over $85 a barrel last month on increasing speculation that at least some nations will get waivers, as well as signs that other OPEC members will pump more to offset any supply gap.
Sources tell India Today that the USA will be releasing a list of countries that would be on the sanctions list and another one of the ones that will get a waiver.
On the other hand, it's unclear whether the United States would grant any waivers, with U.S. Administration officials giving mixed signals.
Goldman Sachs said it expects Iran's crude oil exports to fall to 1.15 million bpd by the end of the year, down from around 2.5 million bpd in mid-2018.
President Donald Trump withdrew from the deal in May, describing it as "defective at its core".
"We're prepared to work with countries that are reducing their imports on a case-by-case basis". To gain the waiver, it likely agreed to a larger cut of imports from previous levels.
Traders said oil was lifted along with Asian stock markets after a phone call between the USA and Chinese presidents raised hopes that the trade dispute between the world's two biggest economies could be resolved. Since then, the Iranian rial hit record lows against the US dollar.