U.S. Special Representative for Iran, Brian Hook, declared in June that the U.S. would impose sanctions on any country found to be importing oil from Iran. The envoy said that there were no exceptions to be made for individual countries.
The government backed up its charge by imposing economic sanctions on Zhuhai Zhenrong Limited, a state-owned Chinese oil trading company, and its CEO on July 22. The move marks the first time the Trump administration has enforced sanctions on Iranian oil exports.
U.S. Turns Up the Pressure
In June, U.S. President Donald Trump targeted the leaders of Iran with sanctions, taking the unusual step of turning up the pressure on the country after its armed forces shot down an unmanned U.S. drone worth about $100 million.
Reports have appeared in the news about Iran selling large volumes of petroleum products to India, Brazil and China, among other countries, by pricing its exports below market rates. Iran has long used front companies to export its products under the radar. The country violates international maritime law to hide its actions on a routine basis.
When reporters asked Hook about news that Asian countries were attempting to import Iranian crude in violation of the sanctions, he replied that there were no waivers in force at the moment and that if China indulged in illicit trade with Iran, it would invite scrutiny and sanctions by the U.S.
There have been reports that China has imported oil from Iran more than once since the latest round of sanctions was announced. Officials in the Trump administration have been pushing for secondary sanctions on China over its continued trade in oil with Iran.
The Sanctions on Iran
In 2019, the Trump administration brought tough sanctions on Iran and vowed to bring the Islamic republic’s ability to export its petrochemical products down to zero. The aim of the sanctions was to force the country to sit at the negotiating table to discuss its regional influence and its ballistic missile program.
Iran wishes to continue to export its oil at the levels that it did before the U.S. withdrew from the accord. The U.S., on the other hand, will not allow Iran to export its products before it agrees to stop its efforts to establish a network of Shia rule across the Middle East.
Sanctions Appear to Be Working
While sanctions are usually an inefficient way to get foreign regimes to change their ways, they appear to be working with Iran. According to Mohammad Javad Zarif, the Iranian Foreign Minister, if sanctions are lifted, Iran’s parliament will immediately ratify the Additional Protocol of the Non-Proliferation Treaty, which allows for monitoring visits by the International Atomic Energy Agency.
Iran’s government terms the offer to allow monitoring visits as “substantive” but says that it does not constitute a modification of the 2015 deal. According to Iran, it isn’t fair to renegotiate the terms of a deal once those terms are accepted.
According to experts, however, it is unlikely that the Trump administration will take Iran up on its offer to allow monitoring visits in exchange for a lifting of sanctions. The U.S. Secretary of State announced a list of a dozen conditions that Iran would need to meet before sanctions are lifted. Among those conditions is the requirement that Iran’s government should end the support that it extends to terror organizations and militias in other countries in the Middle East.
Burgeoning U.S. Oil Industry Emboldens the Government
The U.S. may not have imposed sanctions on Iran if it weren’t for the strength of the American oil industry. According to Sigma Drilling Technologies, a major pulsation solutions company that creates suction dampener products and other equipment used by oil drillers, more than 11 percent of the world’s supply of crude now comes from the U.S. There is also the fact that the U.S. economy is less oil-intensive today than it used to be.
The sanctions have actually proven advantageous to the U.S. oil industry. The drop in the world’s levels of crude supply that the sanctions have brought on have sent oil prices up. Prices in June were at over $65 a barrel, their highest level since May. If U.S. drillers focus on maintaining their operations and keeping production humming, they are likely to do well as the world demands more and more U.S. oil.
