Turning off the spigots…

Decision on Imports of Iranian Oil

Press Statement

Michael R. Pompeo 
Secretary of State

Washington, DC

April 22, 2019


Today we are announcing the United States will not issue any additional Significant Reduction Exceptions to existing importers of Iranian oil. The Trump Administration has taken Iran’s oil exports to historic lows, and we are dramatically accelerating our pressure campaign in a calibrated way that meets our national security objectives while maintaining well supplied global oil markets. We stand by our allies and partners as they transition away from Iranian crude to other alternatives. We have had extensive and productive discussions with Saudi Arabia, the United Arab Emirates, and other major producers to ease this transition and ensure sufficient supply. This, in addition to increasing U.S. production, underscores our confidence that energy markets will remain well supplied.

Today’s announcement builds on the already significant successes of our pressure campaign. We will continue to apply maximum pressure on the Iranian regime until its leaders change their destructive behavior, respect the rights of the Iranian people, and return to the negotiating table.

So, Mr. Watchlist is going to opine…

Iran and Venezuela (PdVSA is also blocked) combined generate, according to recent figures on Wikipedia, over 6.2 million barrels of oil per day. That is a tad shy of 8% of world output. Saudi Arabia and the UAE, who, according to the US, will make up the shortfall, currently produce a bit over 14 million barrels per day. Adding 6 million more barrels per day would represent an over 40% increase in production – assuring that is even possible (it strains credulity, TBH).

The likely reaction to this decision is for foreign governments to use INSTEX or other alternate payment mechanisms that bypass the US dollar and, thus, primary sanctions. Of course, such arrangements do not preclude the use of secondary sanctions – like designations on the newly-rejiggered CAPTA List. But will the US do that?

Mr. Watchlist suspects that the US is overplaying its hand here, badly. Would the US sanction Deutsche Bank, or State Bank of India, if they continued to fund oil imports? I suspect not – while smaller firms might be targets, larger financials are likely safe from Washington’s wrath. Sanctioning a major bank would have significant blowback diplomatically and economically – one could imagine that this could scotch any US-China trade deal, for example.

A ZTE-style enforcement action is not possible, either – there is nothing in law or regulation prohibiting such transactions by foreign firms.

Of course, in the wake of the publication of the Special Counsel’s report, and the continuing onslaught of investigations into the President, anything is possible.

Hold onto your hats…

Link:

State Department Press Release

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