Trump administration imposes oil, other sanctions against Iran

Nov. 12, 2018
On Nov. 5, the US government imposed oil and other sanctions against Iran that were lifted under a 2015 multinational nuclear arms control agreement, the Trump administration announced.

On Nov. 5, the US government imposed oil and other sanctions against Iran that were lifted under a 2015 multinational nuclear arms control agreement, the Trump administration announced. (See Editorial, p. 16). Eight countries that officials later identified as China, India, Italy, Greece, Japan, South Korea, Taiwan, and Turkey will receive temporary exemptions.

“We expect to issue some temporary allotments to eight jurisdictions, but only because they have demonstrated significant reductions in their crude oil and cooperation on many other fronts and have made important moves towards getting to zero [Iranian] crude oil importation,” US Sec. of State Michael Pompeo said at the time of the annoucement.

“These negotiations are still ongoing. Two of the jurisdictions will completely end imports as part of their agreements. The other six will import at greatly reduced levels,” he told reporters during a teleconference.

The Treasury Department’s Office of Foreign Assets Control issued a list of frequently asked questions regarding the imposed sanctions on Nov. 5. Questions 614 through 620 deal specifically with oil, gas, and petrochemicals.

Iran’s oil exports have fallen by about 1 million b/d since peaking in June, the White House said. More than 20 countries have stopped importing Iranian crude, and the administration is pressing others to do the same, it said.

The Trump administration is providing fewer exemptions than that of President Barack Obama, which issued them to 20 countries “multiple times,” Pompeo said. “We will have issued, if our negotiations are completed, eight and have made it clear that they are temporary,” he said.

“Not only did we decide to grant many fewer exemptions, but we demanded much more serious concessions from these jurisdictions before agreeing to allow them to temporarily continue to import Iranian crude oil. These concessions are critical to ensure that we increase our maximum pressure campaign and accelerate towards zero,” Pompeo said.

Prices have been stable

What he termed a “laser-focused approach” has kept global crude prices stable with a benchmark Brent price about where it was in May when the administration first announced it was withdrawing the US from the 2015 Joint Comprehensive Plan of Action (JCPOA), Pompeo said.

“Not only is this good for American consumers and the world economy, it also ensures that Iran is not able to increase its revenue from oil as its exports plummet. We will, we expect, have reduced [daily] Iranian crude oil exports by more than 1 million bbl even before these sanctions go into effect,” he said.

The reimposed sanctions also close “an Obama-era loophole” which allowed countries to continue importing condensate from Iran while sanctions on oil were in place, Pompeo said.

“This administration is treating condensate the same as crude since the [Iranian] regime makes no distinction between the two when it decides to spend its oil revenue on unlawful ballistic missiles, terrorism, cyberattacks, and other destabilizing activities,” he said.

Starting Nov. 5, 100% of the revenue that Iran receives from sales of its crude will be held in foreign accounts and can be used by its government only for humanitarian trade or bilateral trade in non-sanctioned goods and services, Pompeo said.

Evasive maneuvers targeted

The administration is firmly committed to thwarting Iranian government attempts to thwart sanctions on its crude exports, Pompeo said.

“Make no mistake about it: The Iranians will do everything they can to circumvent these sanctions—that’s unsurprising to me. They’ll turn off ships, they’ll try and do it through private vessels, they’ll try and find third parties that don’t interact with the United States to provide insurance mechanisms. The list of Iranian efforts to circumvent these sanctions is long,” he said.

“You should all recognize there’s a reason for that. These sanctions are far tougher than the sanctions that have ever been imposed on the Islamic Republic of Iran. That is why they are so desperate to find ways to circumvent it,” Pompeo said.

The administration is confident that global oil markets will remain well-supplied if Iranian exports cease, the White House said. “From August 2017 to August 2018, US crude oil production increased by 2.1 million b/d and exports increased by nearly 1 million b/d, adding to market liquidity,” it said.

“Over the next year, US production will increase by 1 million b/d or more. We are working with oil producers around the world to increase their supply as well,” it said. “As a result of this increased production, respected forecasters like the US Energy Information Administration expect global oil supply to keep pace with demand in late 2018 and exceed demand in 2019.”