Baku, Azerbaijan, June 29
By Azer Ahmadbayli – Trend:
On June 26, Washington called on rest of the world to stop imports of Iranian crude by November.
Last fiscal year (March 20, 2017- March 20, 2018), according to the country's Customs Administration (IRICA), Iran earned $50 billion in oil export revenue (apart from $7 billion for condensate).
To stifle the Iranian economy, the United States has to first of all deprive Iran of its main trump card – foreign exchange earnings from oil exports. The share of oil exports is about 60 percent, or even more, of all Iran's exports and is the main source of hard currency earnings.
Secretary of State Mike Pompeo has made the US intentions toward Iran very clear: “These will be the strongest sanctions in history by the time we are done. The regime has been fighting all over the Middle East for years; however, after the sanctions come into full force, the regime will have to be battling to keep its economy alive.”
Pompeo also said, “Iran will be forced to make a choice: either fight to keep its economy off life support at home or keep squandering precious wealth on fights abroad.”
Such a prospect has already led to an imbalance in Iran’s financial market - a sharp increase in the volume of exchange transactions since the beginning of the year, followed by the devaluation of the national currency and the deficit of the dollar and the euro with quick rise of prices of imported consumer goods.
It reached the point that Tehran's Grand Bazaar – the largest indoor market in the world – which is considered to be a “heart” of Iran's economic activity, has gone on strike due to the currency crisis that has covered the country. And that’s a wake-up call.
Ironically, the last major strike in Grand Bazaar took place on the eve of the 1979 revolution, according to the Iranian media. Then it was a center of anti-Shah sentiment and many merchants contributed to the financing of the Islamic revolution.
Last year, according to IRICA, Iran exported non-oil goods worth of almost $1.5 billion to the EU states. As for oil exports to the EU, Iran sent there 38 percent of its total produced crude worth up to $19 billion.
If an effective mechanism of protection from the US sanctions is not found, and the EU stops buying Iranian oil, then the country's economy will get a significant blow, and perhaps we will again observe Iranian tankers full of oil standing for months unclaimed in the Persian Gulf.
According to Bloomberg, in the first half of June, Iran reduced oil exports to a minimum during the year - 2,114 million barrels per day compared to 2,511 b/d in early May, as some major buyers have already stopped cooperation with the country due to a threat of oil sanctions return. It is also predicted that oil exports from Iran in 2019 may decrease by another 20-30 percent.
In order to protect their business with Iran, the Europeans should openly confront Washington, but so far rhetoric - not specific deeds - is coming from European capitals
The Iranian authorities are quite skeptical about inspirational statements of the EU representatives.
Nevertheless, Iranian Foreign Minister Mohammad Javad Zarif said on June 24 Europe has given Tehran assurances that Iran will be able to sell its crude despite upcoming US measures against the country.
Meanwhile, France has already stated that the US call on Iranian oil has been taken into account. “We have taken note of the American statements. In the near future we will have the opportunity to consider them with our European partners,” the French foreign ministry said.
Russia is also going to assess the purchase of Iranian oil “from a legal point of view” after the US demand, as reported by Russia’s Energy Minister Alexander Novak.
India is preparing to make rupee payments for Iranian oil under a scheme designed to avoid the consequences of the US sanctions, representative of the Indian government reported June 27. The Central Bank of India has not yet made a final decision on the return of payments in rupees for Iranian oil.
However, yesterday, India’s Oil Ministry has told local oil enterprises to get ready for a “drastic reduction or zero” oil imports from Iran, Reuters reported referring to Indian industry sources, adding that the ministry held a meeting with major refiners and urged them to look for alternatives to Iranian oil.
Last Friday, following the OPEC meeting, it was decided to increase oil production by 1 million barrels per day. The decision was made largely due to the coordination of the positions of Russia and Saudi Arabia. Iran has strongly opposed the increase in production, as this further narrows its possibilities.
Behrouz Bonyadi, an Iranian MP, called Russia’s position "a betrayal".
In his address to an open session of the Iranian parliament on June 27, he strongly criticized Russia, saying that Moscow "cannot be regarded" as a reliable friend and partner for the Islamic Republic.
In addition to claims for “the Russian-Syrian rapprochement at Iran’s expense” he stressed, “We also witnessed the last act of betrayal against the Islamic Republic during the latest meeting of OPEC member states in Vienna as well as in the convention on the status of the Caspian Sea.”
In his remarks, Bonyadi also referred to the country’s foreign exchange problems, saying, “A large portion of imports and foreign currency flight are imposed on us by powers like China and Russia.” This will lead to a win-lose situation for Iran, contributing to more poverty and lack of trust, he concluded.
We are not in Iran’s shoes, so it’s up to the Iranian authorities to provide any assessment on further developments.
“As for the United States,” as Mr. Pompeo stressed earlier, “our eyes are clear as to the nature of the regime, but our ears are open to what may be possible.”