August 08, 2018
The Path to Renewed Oil Sanctions on Iran
How Trump Can Significantly Reduce Tehran's Exports
On August 5, the Trump administration reinstated a first set of U.S. sanctions on Iran that had been suspended under the Joint Comprehensive Plan of Action (JCPOA) nuclear deal. But the bulk of U.S. sanctions on Iran will not come back into force until November 5, 180 days after Trump’s initial May 8 announcement that Washington would withdraw from the agreement. On that date, all of the U.S. sanctions suspended by the JCPOA will be reinstated, including the most important of all: the sanctions on Iran’s oil exports.
Sanctions on oil exports have the potential to be economically devastating to Tehran. Iranian Deputy Oil Minister Habibollah Bitaraf said in June that Iran’s government took in an estimated $50 billion from the sale of oil in fiscal year 2017 and that oil and petroleum products made up 70 percent of Iran’s total exports. With the value of Iran’s currency already falling 50 percent since Trump pulled the United States out of the JCPOA and street protests spreading against Iran’s government, cutting off Tehran’s biggest source of cash has the potential to dramatically hit Iran’s already ailing government.
If they play their hand well, Trump officials can secure large reductions in Iran’s oil exports. But doing so requires the administration to navigate both complex global oil markets and a multilevel diplomatic game involving both governments and global companies. Trump will have to manage deft diplomacy with Iran’s largest customer, China, which has made decisions on Iranian oil within the broader context of rising U.S.-Chinese trade tensions. He will have to maintain a relentless campaign against Iranian sanctions evasion. And he will have to deal with the fact that unilateral U.S. sanctions on Iran’s oil purchases may hasten global efforts to build a mechanism that foreign countries can use to conduct trade despite U.S. sanctions in the future.
Read the Full Article at Foreign Affairs
More from CNAS
-
Could There Be a Way to Make Economic Sanctions More Mission Oriented?
Podcast
One of the main tools foreign policy leaders have to exert pressure on other governments is through the use of economic tools. Sanctions, export controls, investment restricti...
By Lt Col Mary Hossier
-
Boosting Economic Security Collaboration Among G7 Economies and like-Minded Allies
Commentary
Emily Kilcrease, senior fellow and director of the CNAS energy, economics, and security program, and Geoff Gertz, senior fellow, participated in the T7, the official engagemen...
By Emily Kilcrease & Geoffrey Gertz
-
Ducking Climate Science Is a Danger to the U.S. Military. Congress Must Help.
Commentary
This article was originally published in Breaking Defense. The Trump Administration’s recent decision to revoke the EPA “endangerment finding” is emblematic of a trend in Amer...
By Will Rogers
-
CNAS Insights | Trump's Plan B for Tariffs
Commentary
The administration is already pivoting to a new tariff architecture that will mostly, though not entirely, recreate his previous tariffs....
By Geoffrey Gertz
