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
-
Talking Trade with Rachel Ziemba, Ziemba Insights
Video
In the latest episode of “Talking Trade,” Rachel Ziemba of Ziemba Insights says a recent state meeting between President Donald Trump and China’s President Xi Jinping “may not...
By Rachel Ziemba
-
Former NSC China Director on Trump-Xi Summit
Video
Liza Tobin, Former China Director at the US National Security Council, adjunct senior fellow at the Center for a New American Security, and Managing Director of Garnaut Global...
By Liza Tobin
-
China’s Broken Economy with Logan Wright
Podcast
China expert Logan Wright joins Emily and Geoff to talk about China’s broken economy. He explains why the country isn’t going back to high growth rates anytime soon, and what ...
By Emily Kilcrease & Geoffrey Gertz
-
A $5,000 Bike Shows Why It’s Hard to Build in America
Commentary
Decades of global economic integration mean that products built in the US, from cars to advanced battery packs, typically contain foreign-made parts. Manufacturers didn’t cons...
By Chris Kennedy
