US Signals More Sanctions Pressure While Iran Faces Financial Crisis

Iranian media and officials were largely silent over Washington’s move to sanction firms and individuals for violating US sanctions by exporting petrochemicals.

In a clear move to pressure Iran on stalled nuclear negotiations, the Biden administration on Thursday sanctioned Chinese, Emirati and Iranian companies engaged in illicit export of Iranian petrochemicals.

One of Iran’s deputy foreign ministers, Mehdi Seferi, in a state television program Thursday evening said Iran can always set up new companies to trade oil and petrochemicals.

But the United States did not mince words announcing the sanctions, after 15 months of indirect talks with Iran to revive the 2015 nuclear agreement.

“The Biden Administration has been sincere and steadfast in pursuing a path of meaningful diplomacy to achieve a mutual return to full implementation of the Joint Comprehensive Plan of Action (JCPOA). Absent a deal, we will continue to use our sanctions authorities to limit exports of petroleum, petroleum products, and petrochemical products from Iran,” a statement by Secretary of State Antony Blinken said after the Treasury Department announced the sanctions.

The move signaled the administration’s new policy toward Iran which had favored not enforcing tough sanctions imposed by former president Donald Trump while year-long talks were taking place in Vienna. But the end to formal negotiations in March left the Biden team’s strategy facing a dead end as Iran continued its nuclear program by enriching uranium at a higher level and building up more leverage.

At the same time, The Wall Street Journal disclosed on Thursday that the US has been secretly coordinating Israeli air strikes against Iranian targets in Syria since the camoaign began in 2017. Israel has been sharing its plans ahead of most airstrikes, the WSJ quoted current and former US officials.

Deputy foreign minister Seferi, however, remained defiant, saying Iran has been under various sanctions for four decades and has its own ways for self-sufficiency, exports and imports.

“Americans every day add people to their sanctions’ list, but these sanctions will not pose a hurdle to the sale of petrochemical products, and everything will continue as normal,” Seferi said.

In the real world however, it is not easy for Iran to maintain the additional level of exports it achieved since the Biden administration came to office. From a low of 250,000 barrels of crude oil sold per day in 2019, Iran’s exports reached close to a million barrels in early 2022. China has been the main customer because it knew that Washington would not enforce the sanctions while it aimed to restore the JCPOA.

Now, the US is signaling that the rules of the game have changed and pressure will be exerted on third parties buying Iran’s exports and people who are involved as middlemen.

Already, Iranian crude exports declined in May because of Russian competition, as it offers cheaper oil to China.

Iran’s income from oil products and petrochemicals was $23 billion from March 2021 to March 2022 and it aimed to boost it to $27 billion. The foreign currency generated competes with crude exports and is vital for Iran amid its current economic crisis.

Just this week, as the national currency dropped to a historic low, the government ordered petrochemical exporters to sell their dollars in the local market to bring the exchange rate down. The effort had a modest impact and for now has stabilized the Iranian rial.