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Almost 6 months have passed since the US reintroduced sanctions on Iran’s oil sector after unilaterally withdrawing from the Iran Nuclear Deal. It is questionable how effective the measures are.
US officials prior to the November 5th re-imposing of the sanctions threatened that they would be devastating for the Islamic Republic.
“These are the toughest U.S. sanctions ever imposed on Iran, and will target critical sectors of Iran’s economy, such as the energy, shipping and shipbuilding, and financial sectors. The United States is engaged in a campaign of maximum financial pressure on the Iranian regime and intends to enforce aggressively these sanctions that have come back into effect,” the US Treasury’s statement read.
Prior to the sanctions coming into effect, Iranian President Hassan Rouhani said Iran would continue to sell its oil despite Washington’s “economic war.” Foreign Minister Mohammad Javad Zarif said U.S. “bullying” was backfiring by making Washington more isolated.
Despite the vows to devastate Iran’s economy, China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey received waivers from the sanctions and were allowed to continue crude oil purchases from Iran without penalty. The original term of the waiver was 180 days, and it is supposed to end 6 weeks after March 22nd.
Iraq initially didn’t receive a waiver, after which it was given a 45-day one, it was renewed for 90 days. On March 21st once more it was renewed for 90 more days.
The Iraqi government vowed to continue its active trade with Iran even if a waiver was not granted.
Following the renewal of the waiver, at his address at the CERAWeek energy conference in Houston, US Secretary of State Mike Pompeo said that the U.S. is encouraging countries to partner with the U.S. for their energy security.
“We’re reminding them that we’re simply better to do business with than Russia, China, or Iran,” Pompeo said, calling out Iran for the energy influence it exerts over Iraq.
“Perhaps there’s no clearer example than in Iran. Iran uses its energy exports to exert undue influence all across the Middle East, most particularly today on Iraq. While the United States is working to develop an independent, sovereign Iraq, Iran is using its energy to create a vassal state,” Secretary Pompeo said.
In the fourth quarter of 2018, oil prices plunged s oversupply started to build again and as the market began to panic over the U.S.-China trade war with potential consequences on global trade, economic growth, and oil demand growth.
And the expiry of the 180-day waivers is threatening to also cause stirs in oil prices.
“The price of oil, on the other hand, will be key to the U.S. Administration’s decision, consultancy Energy Aspects said in a recent note, as carried by Bloomberg. If prices stay at their current levels (Brent at around $67, WTI at $58), Energy Aspects sees the U.S. extending the waivers for China, India, Japan, South Korea, and Turkey, with import caps slashed by 30-50 percent compared to what these countries are currently allowed to import from Iran. If oil prices rise, the allowed import levels may be lowered only by 20-30 percent, according to Energy Aspects,” OilPrice.com reported.
On top of trading with the countries that received waivers, Iran also continues to do so with “ghost ships.”
Deputy Assistant Secretary of State for Counter Threat Finance and Sanctions David Peyman told VOA News that the US is hunting for the Iranian ships and will hold accountable all that assist the Islamic Republic in the endeavor.
“We are closely tracking ship-to-ship transfers of [Iranian] oil to evade our oil sanctions. And we’re working closely with foreign governments to ensure they are monitoring ship-to-ship transfers off their coasts.”
TankerTrackers.com, reported that it identified in February two cases of clandestine ship-to-ship transfers of Iranian oil with the transponders of the vessels involved being disabled.
The website’s co-founder Samir Madani said that in both cases, a ship transferred Iranian oil to another ship before a third ship picked up the oil from the second ship and delivered it to a port.
“One transfer took around three months to complete, while the other happened during the span of a month or so,” Madani said.
Another US measure against Iranian oil exports is that Washington secured pledges from several nations to avoid putting their flags on Iranian oil tankers.
“Panama really led the way for other countries to follow suit by pulling their own flags and for other countries to commit to the U.S. that they will not reflag those ships that the Panamanians withdrew their flag from,” Peyman commented to VOA.
Countering these sanction-evading maneuvers may prove tricky, however. According to TankerTrackers’ Madani, “Given that these are unilateral sanctions (not by the UN), I don’t see much of a willingness by other countries to intervene in order to prevent such activity in their waters, especially if the other party is not Iranian. The easiest and safest way would be to deal with it after the fact via phone calls and/or fines. Nobody wants an incident out at sea involving 2 million barrels.”
And apparently, Iran doesn’t appear to be struggling as much as advertised by the US. To put it simply, oil and fuel traders are resorting to measures that they already used during the previous term of Iranian sanctions. And those sanctions were enforced by the UN, and not just by the US as a single country.
“Some buyers…will want Iranian oil regardless of US strategic objectives to deny Tehran oil revenue, and Iran will find a way to keep some volumes flowing,” Economist Intelligence Unit analyst Peter Kiernan told Reuters.
On the other hand, the US is also pressuring Venezuela’s oil sales. Similarly, to Iran, Venezuela’s oil exports, as well as economy over-all has come under heavy sanctioning.
However, Venezuela also has a lot of gold, which has been in the media spotlight as something the Maduro government may have stolen or may be stealing.
On January 28, 2019, pursuant to E.O.13850, the Treasury Department’s Office of Foreign Assets Control (OFAC)designated PdVSA as operating in the oil sector of the Venezuelan economy and Secretary of the Treasury Steven Mnuchin determined that the company was subject to U.S. sanctions. As a result, all property and interests in property of PdVSA subject to U.S. jurisdiction are blocked, and U.S. persons generally are prohibited from engaging in transactions with the company.
Simulatenously, OFAC issued general licenses to allow certain transactions and activities related to PdVSA and its subsidiaries, some within specified timeframes or wind-down periods. Transactions with two U.S.-based PdVSA subsidiaries, PDV Holding, Inc. (PDVH) and CITGO Holding, Inc., are authorized through July 27th, 2019, and PDHV, CITGO, and other U.S. companies are authorized to import petroleum from PdVSA through April 28th, 2019. Also, all companies that are active in dealings with the PdVSA are also allowed to continue their business through July 27th, 2019.
Broader economic sanctions were active ever since 2017, but they are all watered down to reduce the impact on the Venezuelan people.
Over the week to March 15th, the US imported 0 barrels of Venezuelan oil, which hasn’t happened since 1973 when tracking began.
In 2018, Venezuela was the third largest supplier of crude oil to the U.S., after Canada and Saudi Arabia, according to the EIA’s preliminary weekly data for the top 10 importing countries.
Those numbers are also considering that Venezuelan oil exports to the United States already had been declining, sanctions on that trade are requiring US refineries that process Venezuelan crude oil to find alternative sources. A complicating factor in the sanctions on PdVSA is that the company owns CITGO, which operates three crude oil refineries, three pipelines, and numerous petroleum product terminals in the United States; however, Venezuela’s interim government is in the process of asserting control over CITGO.
Reports in February 2019 claimed that overall Venezuelan exports of crude oil have gone down by 40%.
On March 19th, Reuters reported that Venezuela suspended crude oil exports to India. The outlet cited a statement by Venezuela’s Oil Minister Manuel Quevedo, who attended an OPEC+ meeting in Azerbaijan.
“Russia and China are seen as the main destinations because of the suspension of oil exports to India,” Reuters quoted the Azerbaijan side. “Quevedo said in order to prevent a sharp reduction, various measures are being implemented and diversification of the export market is underway.”
This goes completely contrary to Quevedo’s previous claims that Venezuela was looking to increase oil exports to India, seeing as the Indian market is fast growing.
US-Based Citigroup is to also sell Venezuelan gold under US pressure.
It would appear at a glance that sanctions on Venezuela appear to be more effective than those on Iran. But it is uncertain if that is true, since both Russia and China fully support the Maduro government and have vowed to even increase purchases. Both Russia and China also still deal with Iran.
fatso – part of a corrupt and criminally insane cabal trying to run the show in washington dc, to the complete detriment of the taxpayers. they need to do something about it and a humongous vetarans demonstration of 1 to 2 million battle-used veterans in washington dc might work. doubt that the national guard or the army or the police would shoot at the mainstay of moronistan’s defense capability.
wrong, the USA uses its military might is to steal from the rest of the world. If the world went off the petro $, the US standard of living would drop. Not as low as Europe, but lower. Saddam and Qaddafi switched to the petro- Euro and the USA killed both of them. Obey the USA or die, Very simple.
The petro-dollar only supports the 1% and the criminal government. They would continue to print money anyway, and give it all to Israel. Not any starving veterans.
True to a point–but one thing to remember if one is American is that the US uses its military to steal from the rest of the world–but they don’t mostly give any of that to ordinary American citizens. They give it to oil moguls and bankers and hedge funds. Actual American people get a bit of trickle-down, crumbs dropping from the big boys’ table . . . but on the other hand, they’re the ones paying for all that military, which dominates the US budget. Ordinary Americans might on average be better off with less military and less stealing but more building of infrastructure and more social programs.
Iran has many years experience of dealing with US sanctions & evading them something Venezuela needs to do.
Russia helped Iran last time. I think Russia traded products for 500,000 barrels a day from Iran.
Russia buy petrol to Venezuela and then sell this petrol( or Russian petrol) to India..nothing new!…sometimes Russia has bought petrol to Irak or Iran..and have bought it to India..which has payed buying weapons to Russia!
“Perhaps there’s no clearer example than in Iran. Iran uses its energy exports to exert undue influence all across the Middle East, most particularly today on Iraq. While the United States is working to develop an independent, sovereign Iraq, Iran is using its energy to create a vassal state,” Secretary Pompeo said.
Hahaha! Ladies and gentlemen, projection at it’s finest. How can he say these things with a straight face, I have no idea. I also like the way they say they “allow” other countries like China to import Iranian crude. Bad news for them is, recently Iran’s natural gas production capacity has increased greatly. Shortly they also have to threaten other countries (like India) using full weight of Fat Mike and sanction them so they don’t import Iranian cheap, sweet gas and become an Iranian vassal. Imagine that!
Pretty funny how the US government, did not see any illegal oil transported by ISIS. Trucked out of Syria to everywhere, to buy American Weapons and pay terrorist. If you told the Average American the Truth, they would call you a liar. Even with all the facts, video, and government confirming it.
The American oil companies need 65 bucks a barrel to break even, so they just blow up or sanction other oil producers until the price rises to a level that pleases the American producers, and their financiers. The flip side is Americans are so poor, they can’t afford the price, so cut back on other purchases. That has caused a goods recession, but bumper profits for the banks. America is cactus, there is no escape, sharpen your blades, payback is coming.
Ultimately, a large part of this the world is doing to itself, by continuing to cower before the US, with countries accepting that they need jewish permission before they can trade with each other. If you want this to stop, the US must be told to back the hell off or else. Seems it’ll still be some time.