As announced Monday, the Trump Administration will no longer offer exemptions to its sanctions blocking the purchase of Iranian oil.
“The decision is intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue,” said the White House in a statement.
According to estimates, the sanctions have already blocked $10 billion in revenue from a government known to support terrorism.
The decision was met with support from Israeli Prime Minister Benjamin Netanyahu, who promised to “stand by the determination of the US again Iranian aggression.”
Governments in Turkey and Iraq insist the sanctions are too severe (but that’s the point).
The goal is simple, explains Sec. of State Mike Pompeo: “To deprive the outlaw regime of the funds it has used to destabilize the Middle East for four decades and incentivize Iran to behave like a normal country.”
The sanctions on Iran were re-imposed in November following Trump’s decision to withdraw from the JCPOA. Exemptions were then offered to give countries time to adjust and to mitigate any negative effects on the market.
Current waivers held by Turkey, South Korea, Japan, India, and China are set to expire on May 2nd.
Pompeo claims the sanctions on Iran will not affect oil prices, but analysts warn to expect an increase of 10 cents or more per gallon. Oil prices jumped 3% on Monday to reach the highest point so far this year.
“I want to emphasize that we have used the highest possible care in our decision to ensure market stability,” said Pompeo. “The US has been in constant discussion with allies and partners to help them transition away from Iranian crude to other alternatives. And we’ve been working with major oil-producing countries to ensure the market has sufficient volume to minimize the impact on pricing. Both the kingdom of Saudi Arabia and the UAE have assured us they will ensure an appropriate supply for the markets.”
The United States will also increase production, he added, noting that output increased by 1.6 million barrels per day in 2018 and is expected to climb another 1.5 million this year.
Monday’s announcement about the waivers follows the official designation of Iran’s Islamic Revolutionary Guard Corps as a “terrorist organization.” The decision, which marks the first time the US has classified an element of a foreign government as a terrorist organization, makes it a federal crime to offer support to the IRGC.
Iran responded by voting to classify all US military troops in the Middle East as “terrorists.”
Author’s Note: Trump’s decision not to extend the waivers accomplishes a number of things: primarily, it ramps up the pressure on the most dangerous country in the world (as per his campaign promise); second, it reminds voters ahead of the 2020 elections that he is still serious about curbing Iran’s influence and bad behavior; and third, the decision will lead to increased revenue for oil-producing allies like Saudi Arabia.