John Jefferson
The Trump administration’s return to “maximum pressure” sanctions on Iran kicked off earlier this month, and nations across the globe can expect to feel the shockwaves of his crackdown on third-party oil dealers.
Iran currently exports an average of 1.5 million barrels of oil per day, but under Trump’s February 6th executive order, the Secretaries of State and Treasury are to work to “implement a campaign aimed at driving Iran’s oil exports to zero.”
The order calls on the Treasury Department to reverse any loosening of sanctions and rescind any waivers offered by the Biden administration.
But it also directs the Treasury Department to re-evaluate “beneficial ownership thresholds.” Currently, companies where the IRGC could have a 50% stake of ownership are squeezed by sanctions, but the order allows Treasury to lower that threshold to include companies that the Iranian regime has any ownership of at all.
PRESIDENT TRUMP CAN STOP IRAN’S MARCH TO NUCLEAR WEAPONS: ‘RE-ESTABLISH CREDIBLE MILITARY THREAT’, REPORT SAYS
The order also calls for an evaluation of whether financial institutions should hold the onus of “know your customer’s customer” – meaning whether they should be held responsible for any exports that originate from Iran but pass through a third party.
Global trade watchers agree that the executive order was a way to put world markets on notice – a statement of intent to warn countries to stop doing business with Iran unless they come to the table for a nuclear deal with the U.S.
Trump admitted as much himself: “The Iran situation, I’m gonna sign it, but hopefully we’re not gonna have to use it very much,” he said as he signed the order.
But Iran has since signaled that it has little interest in working with the U.S. on nuclear disarmament – and Trump has emphasized that Iran cannot have a nuclear weapon.
“The Trump administration and the Iranian regime are talking past each other,” said Jason Brodsky, policy director of United Against Nuclear Iran. “The Iranian regime is looking at a JCPOA-like deal of temporary nuclear constraints in exchange for permanent sanctions relief. The Trump administration is focused on a full disarmament deal.”
With talks at a standstill, Iran has been scrambling for cash as it preps for the U.S.-led global isolation campaign. Here is a look at how nations have begun preparing, and how new sanctions enforcement could hurt their coffers:
Qatar holds the line against Iranian pressure for its $6 billion back
Qatar is under fire from the Iranians to release $6 billion in Iranian oil revenues held in Doha, but a source familiar with Qatar’s plans told Fox News Digital that will not be happening.
Iranian Supreme Leader Ayatollah Ali Khamenei met with Qatari emir Sheikh Tamim bin Hamad Al Thani this week and demanded the money back.
“We consider Qatar a friendly and brotherly country, although there are still ambiguous and unresolved issues, such as the return of Iranian claims that were transferred from South Korea to Qatar,” Khamenei said on Wednesday. “We know that the obstacle to the implementation of the agreement made in this regard is the United States. If we were in Qatar’s place, we would ignore U.S. pressure.”
The $6 billion came from oil payments from South Korea that were frozen in Seoul bank accounts in 2019 under the first Trump administration’s “maximum pressure.”
But the Biden administration agreed to release those funds to Tehran in 2023 as part of a U.S.-Iran prisoner swap, and the money was transferred to a Qatari bank in September 2023. But after the October 7 Hamas attacks one month later, the U.S. and Qatar agreed to block Iran from accessing the funds.
U.S. will have to decide whether forceful crackdown on Chinese imports is worth upsetting Beijing
The order specifically calls for a campaign to drive Iran’s oil exports to China to zero, and the U.S. would be hard-pressed to starve Iran of oil cash without a wide-scale crackdown on the CCP’s imports – which account for 90% of Iranian outflow.
Current sanctions go after individuals and vessels linked with a so-called shadow fleet of ships transporting Iranian oil, but tougher crackdowns could go after the Chinese banks that process oil transactions.
But an aggressive campaign to go after CCP-affiliated companies buying Iranian fuel would rankle U.S.-China relations.
“I still haven’t seen strong evidence to suggest that this administration is going to start really going after Chinese actors, the refiners, the banks and the ports. That’s possible, but it comes with lots of potentially very messy consequences,” said Gregory Brew, energy analyst for Eurasia Group.
National security adviser Mike Waltz has fired warning shots about Chinese oil purchases from Iran.
“China is buying oil from Iran for pennies on the dollar. Iran is using that to send missiles and drones in to Russia, that is then hitting Ukrainian critical infrastructure,” he said in a November interview.
China’s Iranian oil imports tanked in January after a late 2024 Biden crackdown on Iranian oil tankers and shipments, but rebounded in February to a whopping 1.75 million barrels daily, according to preliminary data from Kpler reported by Bloomberg.
But those imports can be expected to fall again, according to Kpler’s analysis. “Some buyers, particularly larger Chinese privately owned refiners, are likely to steer clear of such dealings as a precaution in the near term.”
India dumped hundreds of millions into an Iranian port that could now be crippled by sanctions
The order specifically demands that waivers be yanked back for Iran’s Chabahar Port project, a key trade gateway in southern Iran where India has poured in $370 million.
India had previously secured a waiver for the project, which allowed it to create a Central Asian trade route that bypassed Pakistan, because U.S. officials believed the port helped reconstruction efforts in Afghanistan.
“The Indians decided that they were going to use the Iranians to build port connections and relationships commercially as a counterweight to Pakistan,” said Goldberg. “There’s an India caucus inside the [U.S. government] that’s for it, there’s the Afghanistan folks that were for it, and then the sort of Iran sanctions people saying, “What are we doing here?”
A WEAKENED IRAN HAS IRAQ LOOKING TO CURB TEHRAN-BACKED EXTREMISTS IN COUNTRY
He went on: “We have today a situation where Afghanistan has fallen to the Taliban. So, we currently have a waiver in place allowing the Indians to continue pouring money into the IRGC to at this point and Iran has a corridor from the sea to the Taliban.”
Iraq allows Kurdish oil flow as sanctions threaten its electricity supply next month
The Biden administration offered a sanctions waiver to Iraq allowing them to buy Iranian electricity, which will likely be on the chopping block when it expires in March.
Iraq had suspended oil exports from the Kurdistan region – but this week, faced with U.S. pressure, the Iraqi government lifted the suspension, ending a two-year dispute that cut off 300,000 barrels per day of Kurdish oil flowing through Turkey to global markets.
The U.S. has significant leverage over Iraq – $100 billion of its reserves are held in the U.S., and it could wield that leverage amidst Iran’s increasingly firm grip over Iraqi leadership.
And last week, Iraq banned five banks from conducting U.S. dollar transactions as a way to crack down on Iran getting its hands on U.S. currency. Iraq is a lifeline for Iran’s access to hard currency, and the U.S. has long sought to restrict Tehran’s bypassing of sanctions through its neighbor.
Read the full article here