US President Donald Trump’s administration is expected to announce sanctions against all countries that continue to import oil from Iran, putting an end to waivers granted last year to enable Tehran’s customers to wind down their purchases.
Last month, Iran’s oil exports fell to below a million barrels per day as the expiration date for the waivers nears on May 2. The drop in exports spiked prices in a market already squeezed by loss of production from Venezuela. Oil prices breached $70 per barrel in April and continue to climb as the US clamp down looms.
We look at what the sanctions are and who they will target.
Why are there sanctions against Iran?
The US government imposed sanctions against the Islamic Republic in November 2018 accusing it of support for various terror outfits in the Middle East and specifically targeting any plans to develop a ballistic missile programme.
A key promise during President Donald Trump’s presidential campaign in 2016 had been to tear up the Joint Comprehensive Plan of Action – also known as the Iran nuclear deal - which had been developed under the Obama administration to give Iran relief from nuclear-related sanctions and allow it to access the international financial system. In May 2018, Mr Trump walked away from the agreement and said the US would enforce sanctions, demanding countries reduce their imports from Iran.
Why was the Iran deal controversial?
The agreement was reached by the five permanent members of the UN - known as the P5+1 including China, France, Russia, the UK, the US plus Germany and the EU - in 2015. The deal aimed to curb Iran's uranium-enrichment activities in return for a revival of its beleaguered economy as well as integration to world markets. However, opponents of the deal said it conceded too much ground to Tehran, which would find itself emboldened to fund more proxy wars in the Middle East.
Did countries continue to buy oil from Iran after the latest round of sanctions?
Yes, the US granted eight countries waivers to continue to buy oil from Iran. India, China, Japan, South Korea, Taiwan, Turkey, Italy and Greece were allowed to continue to buy crude from Iran for six months on the provision that they would wind down their exports to zero when the waivers were up for renewal in May.
Which countries with waivers reduced purchases from Iran?
Three of the buyers - Italy, Greece and Taiwan - never used the waivers granted to them and analysts suggested that the Trump administration would be unlikely to renew their exemption. Japanese refiners ended all import of Iranian oil in March ahead of the sanctions. India and China, which have been the biggest importers, of Iranian oil will likely not see their waivers renewed and be forced to end all imports. Ignoring sanctions can result in significant financial penalties.
