How Will Iran Cope with US Sanctions?
Sep 16 2018 Read 731 Times
Come November, Iran's energy sector is set to be hit by a second wave of US sanctions, with analysts warning the restrictions could have a major impact on the nation's oil and gas industry. The sanctions come in the wake of initial sanctions imposed on August 7 which disallowed Iran from purchasing US dollars, as well as precious metals and other products.
The sanctions are part of a larger plan to cut Iran out of the international financial system, a move that was spurred by US objections to Tehran's role in the conflicts in Syria and Yemen, as well as accusations the country supports terrorist groups like Hamas and Hezbollah.
US President Donald Trump was quick to Tweet that "these are the most biting sanctions ever imposed" and that "anyone doing business with Iran will not be doing business with the United States."
It's not just the US boycotting Iran's oil industry, with European exports slumping by 45% and giants like Total SA and Royal Dutch Shell Plc vetoing the country's oil altogether.
Iran bartering, discounts and smuggling
Other experts are more optimistic, maintaining that underhand tactics could help Iran stay afloat in the wake of the US sanctions hit. Currently, the OPEC nation exports almost 800,000 barrels of oil a day, though the figure is on a downward trend and recently slipped to the lowest level seen since March 2016.
Iranian Oil Minister Bijan Namdar Zanganeh has alluded that if forced, the country may resort to measures like bartering, heavy discounts and if necessary, smuggling. In the face of previous oil sanctions, the Middle Eastern nation deliberately disabled tanker tracking systems, concealed destinations and tampered with volume reports to beat the sanctions. As a result, millions of barrels of Iranian oil slipped under the radar. Experts predict that if Iran repeats these tactics it could conceal 200,000 barrels of oil a day.
Experts predict barter trade trend
Furthermore, nations like China, India and Turkey have no plans to sanction Iranian oil and may even snap up undisclosed shipments sold at steep discounts. This could eventually trigger a barter trade trend which would ensure Iran continues to meet its 800,000-barrel daily target well into 2019.
While the manoeuvres will help cushion the blow to Iran's local economy, analysts maintain that overall, a stray 200,000 barrels of oil a day won't have a noticeable impact on the global market.
For more up-to-the-minute oil and gas news don't miss 'Thermal Imaging Provides Early Leak Detection in Oil and Gas Pipelines', which spotlights the latest smart analytics technology from IntelliView.
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