US anti-Iranian sanctions 2.0. Nothing personal, just business

Author : Georgiy Kuhaleyshvili

Source : 112 Ukraine

One of the reasons for the anti-Iranian sanctions is the interests of the United States on the world oil market
19:20, 14 November 2018

Open source

Last week, the US resumed sanctions against Iran. November 5, the Americans have restored restrictive measures that acted against Iran during the period of UN Security Council sanctions in 2006 – 2015. All the countries are forbidden to import Iranian oil. Eight countries, China, India, South Korea, Japan, Italy, Greece, Taiwan, and Turkey can continue imports without penalty. They received a deferment of six months to prevent a crisis in the world oil market. Some Iranian banks were disconnected from the SWIFT payment system, used for the foreign economic activity. It is forbidden to cooperate with 700 individuals and legal entities of Iran, including the Central Bank, shipowner companies, tanker companies, and shipyards. November 8, US President Donald Trump decided to extend the "emergency" in relations with Iran, introduced in 1979 by former President Jimmy Carter in response to the seizure of American diplomats in Tehran during the Islamic revolution. The US continues to block Iranian assets on its territory, accounts in the American banks and their foreign branches. Those who violate the sanctions against Iran are threatened with penal measures.

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The US is demanding that Iran stop sponsoring terrorist organizations in Palestine, Lebanon, and Shiite militias in Yemen and Syria. Since 2012, Iran has spent $ 16 billion to support Islamic extremists and the regime of Syrian President Bashar Assad. Another reason for the anti-Iranian sanctions, which is not voiced by US officials, is the interests of the United States on the world oil market.

Business, which follows Trump's lines

There is no unequivocal opinion on how the sanctions against Iran could influence the United States, given that this is an energy-dependent state and last year ranked second after China in terms of oil imports. Iran is a major player in the global oil market, and in 2017, it ranked 6th in terms of oil export volumes. Reducing the supply of oil on the world market should lead to higher prices. During the 1973 oil crisis, when the countries of the Middle East and North Africa stopped supplying oil to the United States, UK, Canada, Holland, and Japan in response to Israel’s support during Operation Doomsday, the price rose from $ 3 to $ 20 per barrel.

In May-August 2018, oil exports from Iran fell by 62% - from 2.7 million to 1.6 million barrels per day under the influence of US sanctions against 41 Iranian citizens and firms. According to economist Mikhail Krutikhin, the November sanctions might entail a decrease in exports of Iranian oil to 500 thousand barrels per day.

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In 2017-2018, the United States increased its oil exports from 1 million to 1.76 million barrels per day. In June, the Americans set a record and supplied 2.2 million barrels of oil a day abroad. American oil companies work with the same countries as competitors from Iran do: China, South Korea, India, Italy, the United Kingdom, and Holland. Sanctions are a tool for ousting Iranian oil from Europe and Asia. More than 20 countries of the world have already reduced purchases of Iranian oil due to the growing tensions between the US and Iran.

Energy lever of pressure against China and Turkey

Sanctions against Iran are used to indirectly leverage pressure on China and Turkey, buying large amounts of Iranian oil, with which the White House has a rather complicated relationship. The US-China trade war is in full swing due to the disagreements over the economic issues. The US is demanding that China stop stealing American technology, obliges US firms to share technical documentation with the Chinese side, in order to get permission to do business in the Middle Kingdom. The US has also increased import duties to push Chinese goods out of the American market. In September, the United States imposed new duties on Chinese goods for $ 200 billion, while China introduced duties on American products, equivalent to $ 60 billion. Relations between the United States and Turkey are also rather problematic. Turkish President Recep Erdogan distances himself from NATO, emphasizes strengthening regional influence in the Middle East, rapprochement in the military-political and energy sphere with Russia and Ira (in opposition to the strategic alliance of the United States, Israel, and Saudi Arabia).

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The White House wants to use sanctions to deprive China and Turkey of access to Iranian oil and increase their energy dependence on American allies in the Middle East and, possibly, the American suppliers. If China and Turkey continue to buy Iranian oil, they may face US restrictive measures.

Trump’s maneuver

It seems that the Republicans want to tighten the pressure against Iran to the full extent until January 1, 2019. Then the composition of the House of Representatives of the US Congress (which is now dominated by the Democrats) would change. Following the midterm elections, the Democrats will form a majority in the House of Representatives (they to receive 226 of 435 seats), and they will head all the committees. Republicans managed to save the majority only in the Senate.

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Under the Democrats’ dominance in the House of Representatives, sentiments towards the return of the United States to the observance of a “nuclear deal” with Iran might reveal and increase. Any bill requires the approval of both houses of the Congress, and it will not be easy to gain Democrats’ support. Trump has restored the sanctions in advance, while the initiative is still in the hands of Republicans. Although despite disagreements with the president on the issue of a “nuclear deal,” both Republicans and Democrats support sanctions against Iran. In October 2017, the House of Representatives unanimously supported the bill on sanctions against Iran in response to the development and testing by Iran of ballistic missiles. No matter how skeptical the US lawmakers are about Trump’s withdrawal from the “nuclear deal,” both Republicans and Democrats are worried by Iran’s behavior.

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