President Hassan Rouhani and Oil Minister Bijan Zanganeh at the opening of Phase Two of the Persian Gulf Star Refinery, Bandar Abbas, Iran, June 28, 2018
Iran’s Rouhani Government is warning the public of “painful months” ahead, following Monday’s imposition of comprehensive US sanctions.
The sanctions follow Donald Trump’s withdrawal in May of the US from the 2015 nuclear agreement, as the Administration hopes to break the Iranian regime with economic pressure. Listing more than 300 individuals and companies for punishment, the sanctions target the energy and financial sectors.
Guarding against any spike in the global price, the US granted sanctions waivers to eight countries — including Iran’s largest customers China, India, South Korea, Japan, and Turkey — in return for reduction of imports of Iranian oil through March.
Oil Minister Bijan Zangeneh tried yesterday to portray the waivers as an American retreat: “Despite the initial rodomontade [bluster] of Mr. Trump and a number of regional oil producers, the US government ultimately confessed to the severe shortage of oil and the impossibility of eliminating Iran from the market.”
But Zanganeh acknowledged that the sanctions would have some effect, “But this amount of exemptions does not correspond to demand. Hence, I have to say that unfortunately, painful months are predicted for oil consumers in the months ahead.”
The Minister insisted that oil prices will rise, claiming the Trump Administration “artificially” brought them down ahead of midterm elections by drawing from US reserves.
Iran is hoping for double salvation from a price spike: increased revenues to offset losses from its reduced exports, and international reaction against the American measures.
But the US and other countries have planned for months to prevent the increase. OPEC and Russia have agreed to increase output by 1 million barrels per day, filling the gap from reduced Iranian supply.
Oil prices have dropped since Monday, hovering at about $72 per barrel.