The Trump administration is turning the screws on the Islamic Republic of Iran, announcing Monday that countries still purchasing oil from the gulf state would no longer be exempt from the sanctions applied against those sales.
Hoping to choke off Iran’s options until they no longer have any legitimate market for their oil, Secretary of State Mike Pompeo held a press conference to eliminate the Significant Reduction Exceptions that were introduced to help our allies wean themselves off Iranian fossil fuels. Without these exports, Iran’s foreign revenue – the principle source with which the regime props up the economy – will be severely limited, endangering the Islamic government.
“We’re going to zero across the board,” Pompeo said. “With the announcement today we have made clear our seriousness of purposes. We are going to zero. How long we remain there at zero depends solely on the Islamic Republic of Iran’s senior leaders.”
The move will not only box Iran in and potentially force them back to the negotiating table where Trump and Pompeo want them, it will have a strangling effect on the overall global oil market. By restricting Iran’s ability to export, the U.S. will effectively take a million barrels off the market, decreasing an already-tight supply. Crude futures soared in the wake of the announcement; most experts believed the administration would extend the waivers for another six months. Now, countries like South Korea, Turkey, and Japan will only have until May 2 to wrap up their business with the Iranians. To make up for the dearth of oil, the U.S. will planning to partner with Saudi Arabia and the United Arab Emirates to flood the market with fresh crude.
“The United States, Saudi Arabia, and the United Arab Emirates, three of the world’s great energy producers, along with our friends and allies, are committed to ensuring that global oil markets remain adequately supplied,” the White House said in a statement. “We have agreed to take timely action to assure that global demand is met as all Iranian oil is removed from the market.”
In a statement following the announcement, Sen. Ted Cruz (R-TX) applauded the administration for taking a hard line against the Islamists.
“This decision will deprive the Ayatollahs of billions of dollars that they would have spent undermining the security of the United States and our allies, building up Iran’s nuclear and ballistic missile programs, and financing global terrorism,” Cruz said.
How Iran will react to this latest development is unclear, but they will almost certainly be forced to make some sort of move. They cannot sustain this kind of immediate hit to their already-unstable economy without risking a Venezuela-style meltdown. Whether their actions follow a retaliatory path or a willingness to negotiate remains to be seen. One thing is certain: President Trump does not intend to allow Iran to build up a nuclear arsenal under his watch. And while the administration has stopped short of declaring “regime change” as a wish for Tehran, that could be exactly where we’re headed.
Stay tuned.
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