When Trump reimposed severe sanctions on Iran, he waived them for eight countries — China, India, Italy, Greece, Japan, South Korea, Taiwan, and Turkey. These countries account for about one million barrels per day (BPD) of purchases of Iranian oil. The Trump sanctions have slashed Iranian oil exports from 2.8 million BPD to one million — all of which goes to waiver countries.
The waiver, originally imposed in November, exempted these eight nations from the sanctions and permitted them to continue to buy oil from Iran to stop potentially large increases in global oil prices. (The US has said that three of the eight nations have voluntarily cut their Iranian imports to zero but has not identified which countries have done so).
Now the waiver is coming up for renewal and the indications are that the Trump Administration is likely to renew them.
Why on earth are we doing so? By permitting Iran to sell a million barrels per day, we are gifting them with $70 million every single day — an annual total of $25 billion! Why are we allowing Iran this lifeline?
Global oil prices rose to $85/barrel in late September, 2018 and then dropped to $50 by January, 2019. Now the price has settled at a midpoint of $70/barrel and is predicted to stay there for the rest of the year.
So why isn’t Trump willing to inflict a little pain globally and let the price move back up to its levels at the end of last year? Those prices did not cause a global catastrophe and letting them rise now won’t do so either.
Trump’s sanctions on Iran have proven devastatingly effective. He should not now blink and renew the waivers he granted last year. Iran has done nothing to deserve them nor has China — the biggest beneficiary of the waiver. Trump should hold the line and zero out Iran’s oil revenues. The stakes are too high not to.
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