Secretary of State Mike Pompeo announces end to US sanctions waivers: “We’re going to zero.” (Yuri Gripas/Reuters)

In a sharp escalation of its sanctions on Iran, the Trump Administration has ended all waivers for oil purchases.

The step is mainly aimed at the Islamic Republic’s top five customers: China — which buys about half of Iran’s export of one million barrels per day — India, Japan, South Korea, and Turkey.

The White House issued a statement, “This decision is intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue. The Trump Administration and our allies are determined to expand and maintain the maximum economic pressure against Iran to end the regime’s destabilizing activity threatening the United States, our partners and allies, and security in the Middle East.

Secretary of State Mike Pompeo said the waivers will expire on May 2: “We’re going to zero. We’re going to zero across the board.”

Pursuing regime change in Iran, the Trump Administration withdrew last May from the 2015 nuclear agreement between Tehran and the 5+1 Powers (US, UK, France, China, Russia, and Germany), and imposed comprehensive sanctions — including on energy and financial sectors — in November.

Iran’s official oil exports have more than halved in the past year, from 2.5 million bpd in April 2018 to an estimated 1.1 million bpd now. Analysts say some oil is being moved via the black market, but there is no clarity on the amount.

The Islamic Republic has tried to diversify exports, reducing depending on oil revenues, but they still account for more than one-third of the Government budget.

With long-standing internal issues compounded by sanctions, Iran is facing difficulties with production, trade, investment, and a historically-weak currency.

Inflation, which had been brought down to single digits by the Rouhani Government, is now 51.4% percent, according to the Iranian Statistical Center. Prices for food, drinks, and tobacco have jumped 85.3% from a year ago.

The economic difficulties have been exacerbated by destructive floods across the country over the past month. The UN children’s agency says the flooding has affected 10 million people with 500,000 displaced, half of them children.

More than 60,000 houses, 1,000 health facilities, and 1,000 schools have been destroyed or severely damaged. About 100,000 children are now without education.

Iran’s Anger, China’s Criticism

Iranian officials reacted angrily, with threats to close the Strait of Hormuz, a vital route for oil tankers.

“In the event of any threats, we will not have the slightest hesitation to protect and defend Iran’s waterway,” said Alireza Tangsiri, the head of the Revolutionary Guards’ naval force.

Foreign Ministry spokesman Abbas Mousavi emphasized discussions to offset the Americans:

In view of the practical negative effects of these sanctions and the possibility of further intensification of those negative effects, the Foreign Ministry has been continuously in touch with all relevant domestic institutions while holding comprehensive consultations with many foreign partners, including Europeans, international, and neighbors.

China immediately criticized the end to waivers, but maintained a cautious language to avoid disrupting talks over Trump’s trade war against Beijing

Geng Shuang, a Chinese Foreign Ministry spokesman, said, “China consistently opposes US unilateral sanctions. The Chinese government is committed to protecting the legitimate rights and interests of Chinese enterprises.”

Turkish Foreign Minister Mevlüt Çavuşoğlu, who hosted Iranian counterpart Mohammad Javad Zarif last week, chided Washington, “Pushing [us] to buy oil from countries other than Iran is going too far. This violates the regulations of the World Trade Organization and poses a risk to stability in the region.”

European countries, who have increasingly diverged from the US line during the Trump Administration, were quiet Tuesday as they studied the American move. Israel and Saudi Arabia enthusiatically welcomed the measure.

International oil prices, already up $20 per barrel this year, have risen another 3% since Sunday to reach their highest level since October.