On Monday, Trump administration announced that the United States will no longer renew sanction exemptions for those countries that purchase oil from Iran beginning in May. Following the United States. withdrawal from the Iran nuclear deal, special waivers were given to countries, allowing them to buy oil from Iran. However, these were meant to be temporary, and as tensions between both countries have risen greatly, the United States took action in an attempt to “bring Iran’s oil exports to zero, denying the regime and its principal source of revenue,” said Sarah Sanders, the Trump administration’s Press Secretary. Iran’s Foreign Ministry spokesperson Abbas Mousavi has responded swiftly, saying that they view the United States imposed sanctions as illegal.
As a result, oil prices have risen 2.5% worldwide already, with many large economies stepping away from Iranian oil, or preparing to do so. What President Trump calls the “maximum economic pressure campaign” comes on the heels of their recent announcement that the Iranian Revolutionary Guard Corps be labeled as a terrorist organization. The world is not only concerned about the tension between the United States and Iran, but also about the fluctuations in global oil prices.
U.S. Won’t Renew Sanction Exemptions For Countries Buying Iran’s Oil
President Trump will not renew special waivers that have allowed Japan, China, India, Turkey and South Korea to import oil from Iran without running afoul of renewed U.S. sanctions, the White House announced Monday. The waivers are set to expire in early May.
The oil-importing countries have been benefiting from Significant Reduction Exceptions — temporary waivers the Trump administration has been issuing since the president withdrew the U.S. from the Iran nuclear deal and reimposed sanctions on Iran last year.
“This decision is intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue,” press secretary Sarah Sanders said in an emailed statement.
Secretary of State Mike Pompeo said the goal is also to “incentivize Iran to behave like a normal country.”
“Before our sanctions went into effect, Iran would generate as much as $50 billion annually in oil revenue,” Pompeo said as he detailed the policy change Monday morning.
Iran has issued a defiant response, with the state-owned Islamic Republic News Agency citing Foreign Ministry spokesman Abbas Mousavi saying that because Iran views the renewed U.S. sanctions as illegal, “it basically gives no credit to exemptions from these sanctions.”
In addition to the five countries most directly affected by the change, Taiwan, Italy and Greece also have been importing Iranian oil under the U.S. sanctions exemptions since last November. But those countries have already moved to stop importing Iranian oil.
As for the potential effects of removing Iranian oil from the global market, Sanders said the U.S., along with Saudi Arabia and the United Arab Emirates and other allies, “are committed to ensuring that global oil markets remain adequately supplied.”
In a briefing about the change, a senior administration official also said that the Trump administration believes that after months of warnings about the pending move, the global market have effectively already priced in the shift, citing a 2.5% rise in oil prices.
The Trump administration’s decision to halt the exemptions could have the biggest effect in India and China — two of the biggest customers for Iran’s oil industry.
Discussing the oil revenue Iran already has lost, the secretary added, “The regime would have used that money to support terror groups like Hamas and Hezbollah, and continue its missile development, in defiance of U.N. Security Council resolution 2231, and it would have perpetuated a humanitarian crisis in Yemen.”
The U.S. sanctions will continue until Iran agrees to address U.S. demands “at the negotiating table,” Pompeo said.
Sanders said by ending special exemptions for oil imports under the sanctions, the U.S. is proving its “commitment to disrupting Iran’s terror network and changing the regime’s malign behavior.”
U.S. refusal to renew the exceptions for some of the world’s most important economies is the latest phase of what the Trump administration calls its “maximum economic pressure campaign” against Iran. Two weeks ago, the White House said the U.S. will take the unprecedented step of officially designating Iran’s Islamic Revolutionary Guard Corps as a foreign terrorist organization.
Iran has promised to retaliate for that move; its legislature is weighing a bill that would “designate all U.S. intelligence and security forces operating in Western Asia as terrorists and stipulates that any form of support for them will constitute a terrorist act,” the Islamic Republic News Agency reported Monday.
Source: NPR, Bill Chappell, Apr. 22, 2019. Photo credit to Ieh Bahrahm/Getty Images.