Which countries may get relief from US sanctions on Iran?

Baku, Azerbaijan, July 12

By Leman Zeynalova – Trend:

New sanctions on Iran will be a disaster, Cyril Widdershoven, a Middle East geopolitical specialist and energy analyst, a partner at Dutch risk consultancy VEROCY and SVP MEA-Risk, told Trend.

The United States has said it will impose sanctions on any foreign company which has financial dealings with Iran after sanctions are reinstated from November 4, but it will consider requests for “relief” from countries that approach it.

“At present, the official standpoint is still that no one will be exempted from the sanctions. This includes all trade partners of Iran, also international banking or other sectors. However, looking at it strategically, there could be some flexibility within the Washington administration, due to geopolitical considerations. First one could have been on China, but looking at the current growing trade war between US and China this looks not to be on the table,” said the expert.

Widdershoven believes that possible relief could be given to Japan, South Korea and maybe India.

“There will however some reciprocal issues, as Washington for sure will try to get something back, such as support against China, and a breakaway position with regards to international trade war,” he added.

The expert pointed out that Russia, Dubai, Turkey and others will have to look at the options for sure, as especially Ankara has bluntly refused to take any Washington sanctions for granted.

“Growing cooperation between Ankara and Russia could be a point of discussion on which exemptions could be based,” he said.

Further, the expert noted that if looking at current situation of Iran, new sanctions will be a disaster.

“No relief or exemptions will break down the economy within months. At the same time, ongoing unrest in Iran, and the brooming confrontation between Iran and Moscow with regards, also doesn’t bode well. If sanctions will be put in place in full, Iran’s economy is in shambles,” he said.

As for the impact of the situation in Iran on the oil market, Widdershoven noted that prices at present will be effected by Iran, pushing it towards around $90-100 per barrel.

“More of an impact will be if OPEC (Saudi-UAE) and Russia are not able to supply additional volumes to counter the current shortages. With a realization in the market that spare capacity is not enough, price hike above $100 or to $150 could be seen. A geopolitical crisis in the region only will increase the likelihood.”

US President Donald Trump announced on May 8 that Washington was walking away from Iran’s nuclear agreement, known as the Joint Comprehensive Plan of Action (JCPOA), which was reached between Iran and the five permanent members of the UN Security Council - the United States, Britain, France, Russia and China - plus Germany.

Trump also said he would reinstate US nuclear sanctions on Iran and impose "the highest level" of economic bans on the Islamic Republic.

Since the US withdrawal from the nuclear deal, European countries have been scrambling to ensure that Iran gets enough economic benefits to persuade it to stay in the deal. The remaining parties have vowed to stay in the accord.

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Follow the author on Twitter: @Lyaman_Zeyn

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