Top of Trump’s to-do list: sanctions against Iran

November 7, 2024, 2:10 PM

Trump Iran oil — The Jamkaran Mosque near Qom. Iran has been under US sanctions since 1979, and last month the US Treasury announced more aimed at petroleum and petrochemical products

‘Maximum pressure policy’ expected
Sanctions will be ‘very tight’
Rial slumps to new low

Donald Trump’s second term as US president, which is due to start in January, is likely to bring a significant strengthening of sanctions against Iran and a resumption of the “maximum pressure policy”, industry experts believe.

In his first term as president, Trump withdrew from the Joint Collective Plan of Action, a 2015 accord which monitored Iran’s nuclear programme, and reimplemented sanctions aimed at reducing oil sales to zero.

As a result, Iran’s exports of crude oil all but collapsed.

“I think Iran is the least understood or appreciated near-term risk and consequence of the president’s victory,” said Robert McNally, founder of Rapidas Energy, and a former energy advisor to the George W. Bush administration.

Other experts, speaking at the Adipec oil conference in Abu Dhabi, echoed that view. Hasan Hafidh, an oil expert and former Opec executive, said: “He [Trump] is going to make the sanctions very tight, and prevent Iran from exporting oil.”

In Tehran the rial slumped to its lowest ever value against the dollar, as Iranians anticipated a resumption of US sanctions.

Iran is the third largest producer in the Organisation of the Petroleum Exporting Countries (Opec) and produces about 3 million barrels of oil per day (bpd), or roughly 3 percent of total world output. About 1.8 million bpd of its production is exported through the Strait of Hormuz, yielding valuable foreign exchange earnings for the Islamic regime.

In October, during an election speech after an Iranian missile attack on Israel, Trump told supporters that he did not want to go to war against the Islamic republic, but suggested Israel should “hit the Iranian nuclear first and worry about the rest later.”

In March, Trump told the Israeli newspaper Hayom that Iran could have a nuclear weapon in 35 days and that this posed a serious risk to Israel and the wider region.

In an interview with Arabian Business last month, Eric Trump, one of the president-elect’s sons, accused Iran of being behind the two attempts to assassinate his father.

“You better believe he’d reimpose sanctions. It’s one of the reasons that they’re trying to kill him,” Eric Trump said.

China is the major offtaker of Iranian oil, which accounts for 13 percent of its oil imports.

Iran’s exports have reached a six-year high this year, with China taking, on average, 1.6 million bpd in the first nine months of the year, and 1.8 million bpd in June-July, according to Vortexa, the energy data supplier in the City of London.

McNally said “swingeing secondary sanctions” are likely to be placed on China to combat this.

“They will simply go to China and he [Trump] will say, ‘If we see a barrel of Iranian oil coming into a Chinese port, that entire port will be isolated from the United States’ system.’ It might just be what the doctor ordered.”

The regime in Tehran has been under US sanctions since the Islamic revolution of 1979. But the Biden administration turned a blind eye to Iranian exports, which are usually carried by a fleet of older tankers that can turn off transponders and are shielded by opaque ownership structures. Some estimates say that Tehran has access to up to 20 million barrels of oil currently at sea.

But last month, after Iran fired nearly 200 missiles at Israel, the US Treasury announced more measures aimed at petroleum and petrochemical products. The Israeli airforce also bombed targets inside Iran, but avoided hitting Iran’s main export terminal at Kharg Island.