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The U.S. Sanction Attack On Iran Is Far From Over

The United States will continue to increase the economic pressure on Iran, Treasury Secretary Steven Mnuchin said in Israel, during a meeting with Prime Minister Benjamin Netanyahu.

"We have executed on a maximum pressure campaign for sanctions. They have worked, they are working, they are cutting off the money," Mnuchin said as quoted by Al Jazeera. "We will continue to ramp up, more, more, more ... I just came from a very productive working lunch with your team. They gave us a bunch of very specific ideas that we will be following up [on]."

"So I want to thank you for what you've been doing and encourage you, Steve, to do more - more, a lot more," Netanyahu said.

Israel, which Iran sees as arguably a bigger enemy than Saudi Arabia, has loudly cheered U.S. sanctions against Tehran and has pushed for more pressure. Mnuchin did not go into details on the additional steps Washington will take against Tehran, but the ones already taken are definitely having an impact.

The IMF recently said it expected the Iranian economy to contract by 9.5 percent this year because of the sanctions, adding that the country needed oil prices at close to $200 a barrel next year to break even.

Related: The Gas Flaring Crisis In The U.S. Oil Patch

“Iran’s main export, oil, is severely restricted, and imports have collapsed,” the fund noted.

For now, the country is still freely exporting oil products, however, and this has helped it stay afloat. It is not too far-fetched to suggest that oil product exports might become a target of U.S. sanctions as Washington continues to pursue its maximum-pressure approach to Iran.

It is also exporting oil despite the U.S. efforts to bring these down to zero. Turning off tankers’ geolocation devices and making ship-to-ship transfers in the open sea has turned into Iran’s modus operandi to sell its crude abroad. There are willing buyers, too: China’s ship-to-ship oil imports jumped threefold between August and September this year.

By Irina Slav for Oilprice.com

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  • Mamdouh Salameh on October 29 2019 said:
    US Treasury Secretary Steven Munchin is gloating about the success of US sanctions against Iran to a receptive audience (or dare I say) to his effective boss Israeli Prime Minister Benjamin Netanyahu. United States’ policy against Iran is in effect decided in Tel Aviv.

    However, Mr Munchin may gloat from here to eternity but that wouldn’t change the fact that US sanctions against Iran have so far failed to adversely impact Iranian oil industry.

    A key to Iran’s success is the defiance shown by major buyers of Iranian crude, namely China, India, Turkey and to a lesser extent the European Union (EU) to US sanctions against Iran. They have never stopped even for one minute buying Iranian crude. To this one could also add Russia and many other countries who are buying Iranian crude by barter trade.

    A major element in Iran’s ability to frustrate US sanctions is its growing exports of refined products to Europe and elsewhere having had to import gasoline for domestic use before 2017. Iran would be supplying at least 10% of all of Southern Europe’s gasoline and diesel needs and be the top producer of gasoline in the Middle East by a big margin.

    Another aspect of its success is petrochemical production. Despite US sanctions, over 95% of Iran’s petrochemical companies are successfully exporting their products according to Iranian oil minister Bijan Zanganeh. More specifically, he added that Iran’s petrochemical plants are now supplying 66 million tons per year of products annually and these are projected to rise to 130 million tons per year by the end of 2025.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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