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…