The Trump administration said Monday that it will start imposing sanctions on some key U.S. allies unless they stop buying oil from Iran after waivers expire next month.
“If you don’t abide by this, there will be sanctions,” Secretary of State Mike Pompeo said in announcing an end to waivers granted last year to eight countries and jurisdictions that rely heavily on Iranian oil.
“This is what we’re laying out this morning. We have a requirement. To conduct these transactions, one almost always needs to participate in financial markets. We intend to enforce the sanctions.”
The waiver decision came after oil prices have already risen by a third this year and threatens to take more than a million barrels a day off the market. In anticipation of the move, crude oil prices rose 2.4 percent today.
“This decision is intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue,” a statement from the White House said. It said the United States, Saudi Arabia and the United Arab Emirates would ensure global demand is met.
Khalid Al-Falih, the Saudi energy minister, said Riyadh would work to ensure oil supplies and prices remain stable.
Pompeo said Iran had been taking in $50 billion a year in oil revenue before the sanctions were reimposed. He estimated U.S. sanctions have cost the Islamic republic $10 billion so far.
“The regime would have used that money to support terror groups like Hamas and Hezbollah and continue with its missile development in defiance of U.N. Security Council Resolution 2231,” he told reporters. “And it would have perpetuated a humanitarian crisis in Yemen.”
Last November, the administration reimposed sanctions that had been lifted with the 2015 nuclear agreement. President Trump granted waivers to eight of Iran’s biggest customers, allowing them a six-month grace period to wind down their purchases. The affected buyers are China, India, Japan, South Korea and Turkey. The administration also is letting waivers lapse for Italy, Greece and Taiwan, but they have already stopped buying Iranian oil.
The waivers expire May 2, one year after the United States withdrew from the Iran nuclear deal. Sanctions were not reimposed for another six months to give countries time to wean themselves off Iranian oil, but seven countries and Taiwan could not meet the target and were given another six months.
Some of them expected another extension. But Pompeo made clear that the administration’s patience is exhausted.
“We’re going to zero,” he said. “We’re going to zero across the board. We will continue to enforce sanctions and monitor compliance. Any nation or entity interacting with Iran should do its diligence and err on the side of caution. The risks are simply not going to be worth the benefits.”
The decision to grant no more exceptions to U.S. sanctions reflects what the administration calls its maximum pressure campaign to get Iran to change its behavior and renegotiate parts of the 2015 Iran deal. National security adviser John Bolton has been the chief proponent of the argument that the reimposed sanctions are meaningless as long as there are waivers.
Last year, Pompeo laid out a wish list of 12 demands for Iran to meet if it wants sanctions lifted. He has described it as requiring Iran to act like a “normal country,” and not fund Shiite militias in the region, test ballistic missiles, keep its nuclear infrastructure intact so it could theoretically someday develop weapons and provide more civil liberties to Iranian citizens.
“This is the biggest leverage we have on the Islamic Republic of Iran, is their oil exports,” said Brian Hook, special envoy on Iran. “If you want to seek a change in behavior, you have to show seriousness of purpose on the oil.”
Critics of the approach say it amounts to a demand for Iran to capitulate on basic matters of sovereignty and say it increases the potential for confrontation with Iran.
“The attempt now to forego oil waivers and spur Iran’s economic collapse signals a desperate attempt to coerce Iran to restart its nuclear program in order to invite a dire confrontation,” said Jamal Abdi, president of the National Iranian American Council. “Trump is bizarrely set on this destructive policy even as it threatens U.S. security and risks American voters’ digging deeper into their pockets to pay for rising gas prices.”
But the move was praised by others as an effective tool in forcing a reluctant Iranian government to make changes the Trump administration says are needed to bring peace and stability to the Middle East.
“Without oil exports to generate hard currency, the Iranian government will face severe budgetary pressure that will force it to choose between guns for its terrorist proxies and butter for its people,” said Mark Dubowitz, head of the Foundation for Defense of Democracies and a prominent critic of the nuclear deal. “If it doesn’t return to negotiations, it could face economic collapse as America’s maximum pressure campaign intensifies.”
But the end of waivers will probably to create more tensions with some of the allies subject to sanctions.
Turkey had lowered its oil purchases from Iran to zero until it was granted a waiver, and has since resumed buying it. Mevlut Cavusoglu, the Turkish foreign minister, said stopping the waivers will bring neither peace nor stability and will harm ordinary Iranians.
“Turkey rejects unilateral sanctions and impositions on how to conduct relations with neighbors,” he tweeted.