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.
The official cutoff date is May 2, but it is a little more complicated than that. For instance, is Iranian oil that was imported before May 2 and stockpiled covered by the sanctions? There isn’t much evidence that China and India are going to be happy about doing anything and China is making noises that it doesn’t consider the sanctions to legal since they are unilateral (note to Beijing, unilateral is what real nations do…like what happened in Tibet). Turkey said it was counting on another waiver but no one has cared what the Turks wanted since the Siege of Vienna.
The Washington Post notes that despite some leakage, the oil sanctions seem to be taking a toll.
Although the U.S. government’s internal data tracking Iranian oil exports is not public, reports from private analysts note that Iranian oil exports rose in early 2019, perhaps as countries stocked up ahead of the cutoff, and then fell in March as countries likely sought to wean themselves off Iranian oil.
Public estimates put the approximate amount of Iranian oil exports in March at about 1 million barrels per day, down from about 2.5 million barrels per day in April 2018, the month before Trump announced that the United States was withdrawing from the Iran nuclear deal.
There are some signs the pressure is having an effect. Iran has been unable to deliver oil to Syria since January due to international enforcement of the sanctions, the Wall Street Journal reported last month, which has increased pressure on the regime of Bashar al-Assad. In March, Pompeo pointed to Hezbollah’s reported cash shortages as additional evidence that Iran’s coffers were being squeezed, with positive results for regional security.
Don’t expect any major changes from Iran overnight on this, but the oil sanctions combined with the social unrest and the demonstrated incompetence of the mullahs in dealing with either the economy or with the ongoing disastrous floods will make life in Tehran much more interesting and will bring Iran that much closer to collapse.