Finally, U.S. taking hard line on Iran
Starting May 2, the United States will no longer exempt any countries from sanctions if they continue to buy Iranian oil, stepping up pressure on Iran to stop supporting terrorists in the Middle East and agree to not develop nuclear weapons.
The move primarily affects the five remaining major oil importers: China and India and U.S. treaty allies Japan, South Korea and Turkey.
The U.S. could never have taken such a bold step when it was importing so much oil itself from Iran over the last 50 to 60 years.
President Donald Trump made the bold decision as part of the administration’s “maximum pressure” campaign on the theological and military dictatorship of Iran, it was reported, that aims to eliminate all of its revenue from oil exports that the U.S. says funds destabilizing activity throughout the Middle East and beyond by financially supporting Hezbollah and Hamas terrorists versus Israel.
The U.S., with Trump as president, continues to be concerned with Iran’s ballistic missile capabilities and is concerned that the previous deals that the U.S. agreed to under the President Barack Obama administration is giving Iran leaders free rein to develop nuclear weapons capabilities, despite agreeing to delay such activities until future years.
“This decision is intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue,” the White House said in a statement.
Announcing the step, Secretary of State Mike Pompeo said no more sanctions waivers would be granted when the current batch expires on May 2, choking off Iranian income that had been more than $50 billion a year.
“The goal remains simply: To deprive the outlaw regime of the funds that it has used to destabilize the Middle East for decades and incentivize Iran to behave like a normal country,” Pompeo told reporters at the State Department.
The U.S. had granted eight waivers when it re-imposed sanctions on Iran in November after President Trump pulled the U.S. out of the landmark 2015 nuclear deal. The waivers were issued in part to give those countries more time to find alternate energy sources but also to prevent a shock to global oil markets from the sudden removal of Iranian crude.
Three of those waivers, for Greece, Italy and Taiwan, are no longer needed because they have all halted their imports of Iranian oil, it was reported.
But the other five continue to import Iranian oil and had lobbied for their waivers to be extended. NATO ally Turkey has made perhaps the most public case for an extension, with senior officials telling their U.S. counterparts that Iranian oil is critical to meeting their country’s energy needs. They have also made the case that as a neighbor of Iran, Turkey cannot be expected to completely close its economy to Iranian goods.
China, one of Iran’s largest customers, slammed the step, calling it more evidence of U.S. “unilateral sanctions and long-arm jurisdiction.” China, which relies on imports for about half of its oil, could present the toughest diplomatic challenge for the U.S. in trying to enforce its sanctions.
Iran brushed off the decision, calling the sanctions “illegal.”
Earlier, Iran reiterated its long-running threat to close the Strait of Hormuz if it’s prevented from using the crucial waterway in the Persian Gulf through which about a third of all oil traded at sea passes.
Left unclear by the U.S. decision is whether the five countries will face immediate American sanctions if they continue to take delivery of Iranian oil after the waivers expire.
Time will tell whether the price of crude oil will increase significantly. U.S. oil production has risen in recent years by “more than all of Iranian production,” so there is adequate capacity reportedly should there be a need for oil supplies.
The link between oil prices and the U.S. economy has diminished, experts say, as American oil production has increased.
Saudi Energy Minister Khalid Al-Falih said in a statement that his country would work with other oil producers “to ensure adequate supplies are available to consumers while ensuring the global oil market does not go out of balance.”
“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,” said Sen. Ted Cruz, R-Texas.
Finally, the U.S. can put the squeeze on Iran financially. Any country where people openly chant “Death To America’’ can’t be trusted here, can it?