Wed, 24 Jul 2019

U.S. sanctions seek to cripple Iran's oil-dependent economy

By Sheetal Sukhija, India's News
06 Nov 2018, 12:31 GMT+10

TEHRAN, Iran - As the U.S. sanctions targeting Iran's oil and shipping industries resumed on Monday, the Islamic Republic struck a defiant tone, vowing to "continue selling oil."

Responding to the sanctions that have been reinstated by the U.S. to cripple Iran's oil-dependent economy, the Iranian President Hassan Rouhani told economic officials in Tehran that Iran would continue to sell its oil despite Washington's "economic war," and said, "We will proudly break the sanctions."

However, the U.S. has temporarily allowed certain countries - that are top buyers of Iranian oil - temporary waivers to continue oil imports from the Islamic Republic without penalty.

Washington said that while it plans to eventually halt all purchases of crude oil from Iran, it was allowing temporary waivers to eight countries, including China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey.

Hours after all the sanctions were lifted, U.S. Secretary of State Mike Pompeo warned that the U.S. will continue to exert "relentless pressure" on Iran unless it changes its "revolutionary course."

Addressing a press briefing, Pompeo also said, "More than 20 importing nations have zeroed out their imports of crude oil already, taking more than 1 million barrels of crude per day off the market. The regime to date since May has lost over $2.5 billion in oil revenue."

The top diplomat pointed out that the exceptions are designed to last 180 days and pointed out that the waivers were issued to countries that have already cut purchases of Iranian crude over the past six months, and to "ensure a well-supplied oil market." 

Pompeo further warned, "The Iranian regime has a choice: it can either do a 180-degree turn from its outlaw course of action and act like a normal country, or it can see its economy crumble."

Speaking about the sanctions on Monday, the U.S. President Donald Trump too cited concerns regarding global price spikes.  

Trump pointed out that he wanted to go slow on the sanctions and said, "I could get the Iran oil down to zero immediately but it would cause a shock to the market. I don't want to lift oil prices."

Currently, crude exports contribute one-third of Iran's government revenues.

In April, Iran's exports peaked at 2.8 million barrels per day (bpd), including 300,000 bpd of condensate, a lighter form of oil.

According to energy consultancy Wood Mackenzie, which expects volumes to drop to 1 million bpd, overall exports have since fallen to 1.8 million bpd. 

In October, oil prices rallied above $85 per barrel on fears of a steep decline in Iranian exports.

Since then, prices have fallen on expectations that some buyers would receive exemptions as supply from other big producers has increased.

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