US Sanctions Against Iran Come Into Force, India Among Eight Countries Relaxed To Buy Oil
- 05-Nov-2018
- 0 Comments
New Delhi: US sanctions against Iran came into effect on Monday. Former President Barack Obama’s 2015 agreement to ease harsh restrictions on the oil-rich country in exchange for curbing its nuclear ambitions. While US Secretary of State Mike Pompeo called it “the toughest sanctions ever put in place on Iran”, Iran’s President Hassan Rouhani said the Islamic republic “will proudly bypass sanctions”.
The fresh restrictions will hit oil exports, shipping and banks — all core parts of the Iranian economy and will also directly affect companies from third countries doing business with the West Asian country. It remains to be seen if the development leads to a rise in crude oil prices after it eased in the past few days, though the US has granted temporary waivers to eight countries to continue importing Iranian oil
India, which imports over 17 per cent of its oil from Iran, is among the eight countries granted a temporary exemption, US announced on Monday. The other countries are China, Italy, Greece, Japan, South Korea, Taiwan and Turkey. The exemption, for now, is expected to help ease the pressure on crude prices a major concern of the Narendra Modi government.
Why did the US reimpose sanctions on Iran?
The restoration of sanctions is part of a wider effort by US President Donald Trump to force Iran to curb its nuclear and missile programs as well as its support for proxy forces in Yemen, Syria, Lebanon and other parts of the Middle East. Calling the Obama-era sanctions “defective to the core”, Trump pulled out of the agreement in May. The deal was been signed alongside the UK, France, Germany, China and Russia, and was endorsed by the UN Security Council.
More than 700 individuals, entities, vessels and aircraft are now on the sanctions list, including major banks, oil exporters and shipping companies. Pompeo said more than 100 big international companies have withdrawn from Iran because of the looming sanctions.
How will the sanctions impact Iran and oil trade?
Oil is Iran’s main source of income and is also the third-largest producer among the Organization of the Petroleum Exporting Countries (OPEC). In 2018, Iran exported about 2.7 million barrels per day. Through its sustained pressure, the US has managed to reduce Iran’s oil exports from 2.7 million to 1.6 million barrels a month, according to internal US estimates.
In addition, the Brussels-based Swift network for making international payments is expected to cut off links with targeted Iranian institutions, isolating Iran from the international financial system. The measures will mainly affect Iranian companies in direct business with other foreign firms. Saudi Arabia, the leading player of the OPEC committee, has said that it would fill in for the lost supply.
