The US unleashed its “toughest ever” sanctions against Iran on Monday, a move that has already sparked mass protests in the oil-rich nation. The Trump administration reinstated all sanctions removed under the 2015 nuclear deal, targeting both Iran and states that trade with it. They will hit oil exports, shipping and banks – all core parts of the economy.
CBS reports Monday’s action will be the most significant move resulting from President Trump’s decision in May to withdraw from the Iran nuclear deal. The U.S. was not able to force Iranian oil exports to zero — which was its stated goal. But Secretary of State Mike Pompeo, speaking with reporters on Friday, credited the intense pressure from the administration with driving down those exports substantially. So far, the decrease includes a significant reduction in the imports by China, by 200,000 barrels a day, according to a GAO report on Iran sanctions.
“Starting today, Iran will have zero oil revenue to spend on any of these things,” Pompeo said, in reference to Iran’s support for terrorism, military involvement in Syria, ballistic missile development and cyber hacking activities. “Zero.”
Administration officials say that Iran is already feeling the impact of the sanctions snapback. Iranian oil imports have cascaded downward in the last few months, since many companies and countries had anticipated the return of these sanctions.
France 24 reports Iran’s supreme leader Ayatollah Ali Khamenei denounced the measures on Saturday, saying Trump had “disgraced” US prestige and would be the ultimate loser in the long-running quarrel between the countries. The US side was unmoved.
World oil markets were on alert, nervously set to gauge the consequences of the sanctions. “All eyes will be on Iranian exports, whether there will be some cheating around US sanctions, and on how quickly production will fall,” said Riccardo Fabiani, an analyst for Energy Aspects. Oil is Iran’s main source of income. But the sword has two edges: Iran is also the OPEC cartel’s third-largest producer.
The US stance has already inflicted serious pain on Iranians, with the country’s currency, the rial, losing more than two thirds of its value since May. Iranian oil exports have fallen by about a million barrels a day in that time, though India and China have continued to purchase it. Most Europeans, as well as Japan and South Korea, have stopped.
Asked if the US had firm commitments from India and China to stop all oil purchases from Iran within six months, Pompeo replied: “Watch what we do. Watch as we’ve already taken more crude oil off the market than any time in previous history.”
Saudi Arabia is the only country with the capacity to make up for lost Iranian oil production.