Iran’s oil defies US sanctions

Iran’s oil defies US sanctions

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On May 2, US President Donald Trump announced that no country could buy Iranian oil to “make exports zero” from Tehran and “deprive the regime of its main source of income.” In fact, Washington, which has imposed sanctions on the Iranian oil sector since November 5, 2018, has decided to end the “Exemptions” system that still allows eight countries (China, India, Turkey, Japan, South Korea, Taiwan) , Italy, Greece) to import Iranian crude oil.

US sanctions are aimed at drying up Iran’s “hard” currency. It goes directly to oil, the main spring that feeds the Tehran treasury in what it needs to make a long-lasting and controversial influence in the Middle East. For Trump, when Iran becomes unable to secure Enough dollars and Euros, it would not be able to pay the bills of its allies and pay their salaries and the pro-propaganda industry that contributes to the consolidation of its regional agenda against Washington and its allies in the region. But the question arises in the context: has Iran complied with the sanctions imposed on it?
In defiance of US sanctions on the Iranian economy, an investigation by the New York Times reported that China, Turkey and other countries received oil shipments from of Iranian tankers more than usual. Since the tightening of US sanctions on Iranian oil exports, the investigation tracks 70 Iranian carriers. The result was that 12 tankers carried oil from Iran’s ports and brought it to China and the eastern Mediterranean where Syria and Turkey were buying. According to the study, the trips of Iranian oil vessels can be divided into six ships transporting oil to the buyers in China and six other ships to the eastern Mediterranean.
“You can not direct these kinds of threats if you can not implement them, which makes the administration look weak and helpless,” said Richard Nippo, a Columbia University researcher and former White House and State Department official during the Obama administration. The researcher stressed that there are restrictions on the power of USA, China and other countries are ready to say, no, we will not obey US commanders. “” The sanctions have not prevented Iran from transporting oil to the Mediterranean and Asia, “said Noam Radan, analyst at Kleber Data, which tracks global crude shipments. “Adding that” Iranian oil tankers are regularly anchored in China, where satellite imagery and data show Iranian carriers staying in Chinese ports for hours or days. ”

Rep. Marco Rubio called on to “intensify pressure on violators of US sanctions against Iran,” stressing that “the Iranian regime has shipped millions of barrels of oil to China blatantly.” According to researcher Nibu, “To tighten the screws on China, Trump administration will need to punish Chinese people Bank or other Chinese banks dealing with the Central Bank of Iran. “He added that” the United States can also punish the giant energy company Sinopec, “noting that” the imposition of sanctions on banks or Sinopec will have far-reaching consequences on global trade and deepen the gap between Washington and Beijing. “Before the end of sanctions on May 2, China imported 500,000 barrels of Iranian oil a day. Last month, China’s imports fell to around 360,000 bpd, according to Kepler Company.
As sanctions continue to paralyze the Iranian economy, Tehran has resorted to other measures. Some experts estimate that 22 million liters of gas smuggled out of Iran on motorcycles every day to more lucrative markets. In addition, between $ 2 million and $ 3 million in cash is reportedly transferred from Afghanistan to Iran to help support its economy.

That some countries that monitor the continuation of China’s imports of Iranian oil may begin to pressure the Trump administration to give exceptions, or perhaps decide to go ahead and buy oil, even if secretly, in June and after a meeting with Japanese Prime Minister Shinzo Abe, Hassan Rouhani said Abe told him that “Japan is interested in continuing to buy Iranian oil.”
But in the light of past experience, it would be very difficult, if not impossible, to implement the goal of preventing oil exports to “as close as possible to zero.” Iran, through its previous experiences, has been able to avoid oil embargo policies and has created outlets to evade the blockade. There are, for example, specialized exchanges where companies do no t deal with dollar and there are banks that have focused their operations with besieged countries, which in turn do not deal with the dollar. It is natural for these enterprises to become limited in scope not to deal with the dollar. But profits are being realized by the volume of operations or profits they make in dealing with besieged Iran. These institutions were established in China and India. There is also a policy of shipping Iranian tankers to importing countries before the siege began and the price of consignments sent from refineries was received in advance without any official encroachment on the blockade. There is also extensive Iranian trade with neighboring countries such as Iraq, Russia, Kazakhstan and Turkey.

In the past fiscal year, Iraq imported about $ 6 billion worth of food, agricultural, household items and spare parts for cars, as well as another $ 6 billion of Iranian gas. Reports indicate that during his recent visit to Iraq, President Hassan Rowhani tried to increase the value of trade between the two countries from $ 12 billion to $ 20 billion a year. Washington has been upset by the trade expansion between the two countries. In spite of all attempts to avoid the blockade, the Iranian economy has been severely damaged and the standard of living of the citizens has deteriorated and the corruption and inflation that have been exacerbated by the embargo have increased. Tehran was forced to cut its budget and expenditures and reduce dependence on oil.

Iranian Studies Unit
Rawabet Center for Research and Strategic Studies