Iran has vowed to skirt US sanctions and keep exporting oil. The US goal of cutting Iranian oil exports to zero is already being rolled back by reality.
Image: Reuters/R. Homavandi
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Iran stood defiant against the reimposition of US sanctions on Monday as President Hassan Rouhani vowed to keep selling oil during what he described as a "war situation."
"America wanted to cut to zero Iran's oil sales ... but we will continue to sell our oil ... to break sanctions," Rouhani said in comments broadcast on state television.
The new American sanctions that went into effect on Monday target Iran's oil exports and financial transactions, hitting the country's main source of revenue and hard currency.
They come at a time when Iran's economy and currency is reeling from US President Donald Trump's "maximum pressure" policy following the unilateral withdrawal of the United States from the 2015 international nuclear accord in May and a first tranche of sanctions in August.
Rouhani described his country as preparing to buckle down under assault.
"We are in the economic war situation. We are confronting a bullying enemy. We have to stand to win," he said. "Today the enemy (the United States) is targeting our economy ... the main target of sanctions is our people."
US wants to stymie Iran's oil exports
The United States has said it wants to reduce Iranian exports to zero barrels and would sanction countries and companies that buy Iran's oil. But the Trump administration has toned down that demand to avoid hurting ally economies and unsettling oil markets by taking OPEC's third-largest oil producer out of the market.
The US strategy relies heavily on Saudi Arabia pumping at its maximum capacity of 12 million barrels a day, up from under 11 million barrels today.
However, it is unclear if, and how fast, Riyadh can pump spare capacity to fill any gap left by Iranian crude. Tight markets and risk to supply in major oil producers like Libya, Nigeria and Venezuela raise the stakes. Rising oil prices also threaten to hamper global economic growth and hit consumers at the pump.
Iran nuclear deal — treaty under threat
A year after Donald Trump pulled the US from the international nuclear accord with Iran, the Middle East nation announced it would no longer adhere to some "voluntary commitments" in the accord.
Image: picture-alliance/epa/D. Calma
The deal breaker
President Donald Trump announced on May 8, 2018 that he was pulling the United States out of the 2015 Iran nuclear deal, arguing that the international accord was not in America's "national interest." The decision threw a cloud of uncertainty over the future of the nuclear accord and raised tensions with US allies in Europe.
Image: Reuters/J. Ernst
Slap in the face
Britain, France and Germany lobbied the Trump administration and Congress to remain in the nuclear accord, arguing that the deal was working and a US violation without a follow up plan would be destabilizing. In European capitals, the Trump administration's withdrawal was viewed as a slap in the face of allies.
Image: Reuters/K. Lamarque
Iran scrap 'voluntary commitments'
A year to the day after Trump's announcement, Iran informed the other signatories of the accord that they would no longer adhere to certain "voluntary commitments." Iranian President Hassan Rouhani said the signatory nations had 60 days to implement promises to protect Iran's oil and banking sectors or Iran would resume the enrichment of uranium.
The decision came after the United States deployed an aircraft, the USS Lincoln, along with a bomber task force to the Middle East. Washington said the deployment was intended as a "clear unmistakable message." Iran said it took action because the European Union and others "did not have the power to resist US pressure."
Image: AP
A triumph of diplomacy
The Joint Comprehensive Plan of Action (JCPOA), better known as the Iran nuclear deal, was signed in 2015 by United States, China, Russia, France, Germany and Britain (P5+1) and Iran following years of negotiations. Under the international agreement, Iran agreed to dismantle its nuclear program and be subject to monitoring in exchange for the lifting of international nuclear related sanctions.
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Compliance and verification
The JCPOA includes a robust monitoring, verification and inspection regime carried out by International Atomic Energy Agency (IAEA). The UN watch dog has verified Iran's compliance with the deal in 12 quarterly reports. The JCPOA allows Iran to pursue a peaceful nuclear program for commercial, medical and industrial purposes in line with international non-proliferation standards.
Image: picture-alliance/dpa/R. Schlager
Obama's achievement
The Iran nuclear deal was President Barack Obama's signature foreign policy achievement. Seeking to undo nearly every Obama administration legacy, Trump came into office calling it the "worst deal ever." The Trump administration argues the nuclear deal doesn't address other unrelated issues such as Iran's ballistic missiles, regional influence, support for "terrorist" groups and human rights.
Image: Reuters/Y. Gripas
Iranians approved
The nuclear deal and lifting of punishing nuclear related international sanctions created optimism in Iran after years of economic isolation. However, even before Trump pulled the US out of the deal, Tehran blamed the US for holding back international investment and not fulfilling its end of the bargain due to the uncertainty created by Trump's threats.
Image: picture alliance/AA/F. Bahrami
The opponents
After eight years with Barack Obama, Israeli Prime Minister Benjamin Netanyahu found the US president he wanted in Donald Trump. The Israeli leader repeatedly slammed the deal despite his own military and intelligence chiefs' assessment the that JCPOA, while not perfect, was working and should be maintained. Saudi Arabia and the UAE are the other main opponents of the nuclear deal.
Image: Reuters/R. Zvulun
Who's left?
The EU-3 (Britain, France, Germany) have scrambled to ensure that Iran receives the economic benefits it was promised in order to avoid Tehran pulling out of the deal. As EU businesses face retaliation from the US for doing business with Iran, many are opting to avoid Iran. This would likely be a present to Chinese and Russian businesses.
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Secretary of State Mike Pompeo is expected to announce eight countries on Monday that will be granted temporary waivers from the oil-related sanctions. They are likely to include major buyers of Iranian energy such as Turkey, South Korea, India, Japan and Italy.
Iran's exports have already dropped by more than 1 million barrels per day since May, as some buyers remained cautious and sought to appease the United States.
However, Iran has years of sanctions-busting experience and is already turning off tanker signals and storing oil in offshore tankers. It has also started selling discounted oil to private buyers on a domestic exchange.
To keep the nuclear deal afloat, the EU, China and Russia are scrambling to roll out a special purpose vehicle to process transactions and oil purchases from Iran.
