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Trump: Iran sanctions oil to stop ‘death and destruction’ — here’s how



iran oilRaheb Homavandi/Reuters

  • The US will reimpose oil sanctions against Iran on
  • Eight countries are set to receive sanctions
  • But they could still end up squeezing global oil

In the wake of President Donald
withdrawal from the Iran nuclear deal
earlier this year,
Washington will reinstate more economic penalties against Tehran
at midnight on Monday.

This is the second round of
sanctions the administration has enacted since exiting the
agreement, this time targeting energy and financial operations in
the country. Those that buy oil from Iran after the cutoff could
be penalized, through fines or exclusion from the US financial

What’s the point?

Oil is big business in Iran, with
exports accounting for more than a tenth of gross domestic
product in 2017. The sanctions are designed to exert financial
pressure by cutting the Islamic Republic out of the global
market. As Secretary of State Mike Pompeo put

, they aim to
deprive “the regime of the revenues that it uses to spread death
and destruction around the world.”

The Trump administration created
list of demands
Iran would need to meet for sanctions to be
lifted, including completely halting its nuclear and ballistic
missile program and ending military engagement in
Syria and Yemen
. Other world powers have criticized the
strategy, however, for undermining nonproliferation

In a research note, RBC analysts
said the conditions “seem designed to produce a complete
capitulation, if not a regime change, and require maximum
economic pain in order to yield such a dramatic result.”

Which countries are included? 

Most of them. Pompeo said Friday
the administration will
grant temporary waivers
to eight countries that have
“demonstrated significant reductions in crude oil and cooperation
on many other fronts and have made important moves toward getting
to zero crude oil importation.”

The countries won’t be named
until Monday, but Bloomberg
Japan, India, South Korea, and China are expected to
be among recipients. Turkey, a major destination for Iranian
crude, could also be included. Pompeo said the European Union,
which has drafted its own
plans to circumvent US sanctions
, will not be.

The policy is in stark contrast
to oil sanctions under the Obama administration, which granted
waivers to 20 countries and expected those countries to reduce
Iranian oil imports by a fifth every 180 days. The Trump
administration has demanded at least two cut imports to zero
“within weeks” and that the others reduce at a faster rate than

Will there be enough oil for the world?

In anticipation of sanctions, oil
exports from Iran have already dropped by about a third since
May. The Trump administration has said its ultimate goal is to
cut OPEC’s third-largest producer out of the energy market, but
analysts doubt that will happen.

Still, analysts estimate 1.3
million to 1.7 million Iranian barrels per day will roll off the
market by the the first quarter of 2019. Meanwhile, there are
supply disruptions in other key OPEC countries, including
Venezuela and Angola.  

Earlier this year, the
International Energy Agency said sanctions could make
maintaining global supply “very challenging”
and would come
at the expense of maintaining an adequate spare capacity

The Trump administration has
looked to other Middle Eastern producers, most notably Saudi
Arabia, to increase production. But some analysts are skeptical
Riyadh has the spare capacity necessary to offset the

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