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Op Ed - Iranian Affairs

As Sanctions Bite, Iran Fails to Sell its Oil

Following the Iranian regime’s failure to sell its oil through stocks, Tehran has also stumbled in finding a buyer for one million barrels of light oil.

To add insult to injury, even the countries waived by the United States to purchase Iran’s oil – specifically Greece and Italy – are also refraining to use this leverage.

“The current U.S. sanctions against Iran are more difficult than the eight-year war with Iraq,” Iranian Oil Minister Bijhan Zanganeh said to the media. No European country has purchased oil from Iran after the U.S. withdrew from the 2015 nuclear deal, he added.

With the May deadline approaching fast, the Trump administration has shown no signs of extending this waiver. If Iran’s oil exports are fully sanctioned and brought down to zero, it is only a question of when this regime will crumble.

War conditions

“Various parties have provoked us, yet we haven’t said a word. We are literally involved in harsh war conditions. We have worked with anyone possible, yet we can’t reveal any names because at any given moment a few hundred people are monitoring us,” Zanganeh added.

To add insult to injury, the U.S. has no intentions of decreasing the pressures imposed on the regime.

“What we have announced is the policy to get to zero imports of Iranian crude as quickly as possible. We are not looking to grant any future waivers or exceptions to our sanctions regime, whether it is oil or anything else,” Brian Hook, U.S. Special Representative on Iran, told Japanese public broadcaster NHK while on a visit to Japan.

There is also a bleak forecast about the regime’s future exports, especially below the psychological threshold of 1 million barrels per day.

“They will be able to be in that 800,000 to 1 million barrels-per-day margin on average. Some months will be lower than others,” said Amos Hochstein, a former State Department official who managed sanctions on Iran during Barack Obama’s administration, in an interview with Bloomberg.

Turning point

In his latest press conference on February 5th, Zanganeh further explained how the regime’s deep troubles include the fact that European countries have refused to purchase any oil from Iran after Washington withdrew from the 2015 nuclear deal back in May of last year.

“No European country other than Turkey has purchased oil from Iran, whereas Greece and Italy were even waived from sanctions,” he explained.

Understanding the importance of the U.S. nuclear deal exit turning point and intending to zero the regime’s oil exports, the Iranian oil minister shed light on Tehran’s attempt to sell oil in other methods.

“We are also involved in efforts to export our oil in other methods (through the black market and bypassing sanctions). Of course, I cannot get into details… We are aware that hundreds of people are monitoring us to identify even the smallest route and to use this intelligence to deliver blows to us,” he explained.

Becoming desperate

Despite signing a highly boasted contract along with France’s Total to invest in Iran’s oil, China’s major CNPC petroleum corporation has called it quits after Total. Whereas Iran desperately needs this type of support.

“The fact that some people say we have no interest in working with China and Russia is not true. We signed the phase 11 contract [of South Pars gas field in the Gulf waters] with the Chinese having 30 percent of the agreement. Now that Total has exited this contract, the main portion is in the hands of the Chinese. For the north and south Azadegan oil fields, we have entered tender talks with CNPC. We also entered talks with Sinopec in non-tender talks about the Yadavaran oil fields,” Zanganeh added.

Despite the Iranian regime boasting about continuing to export oil despite U.S. sanctions, the devil is in the details over where the rendered money is landing. Zanganeh made it specific how oil revenues are not being deposited to Tehran directly and the money is being placed in frozen bank accounts outside of Iran.

“We have the Ram oilfield in the North Sea where production was halted for four years when the sanctions returned [in 2012]. We are partners with a British firm in this oilfield and our share of the revenue is being placed in a frozen bank account. Furthermore, Iran’s 10 percent share of the Shah Deniz oil field and the gas compensates are also being placed in a separate and blocked bank account,” the Iranian regime oil minister explained.

All this portrays a very glim image of Iran claiming to export oil and gas to save face, while failing to receive any of the profits.

Final thoughts

Iran’s oil exports have dramatically decreased following Washington’s decision to pull out of the decidedly flawed 2015 nuclear deal. Many countries ended their oil imports and a large number of major companies launched an exodus out of Iran, ongoing to this day.

While Iran may continue to export oil at around 1 million barrels per day, for now, the frozen revenue are only permitted to be used for purchasing humanitarian and fundamental goods to provide for the Iranian people. Knowing the nature of Iran’s regime, even that scenario is quite unlikely.

Protests and strikes are continuing on a daily basis following the December 2017 uproar that shocked the very pillars of this regime. 40 years into the clerics’ reign, people across the country are constantly protesting poor economic conditions and unbridled corruption.

As protesters are showing their resilience to continue demanding what is rightfully theirs, if the U.S. sanctions all of Iran’s oil exports in May and waivers are discontinued, those sitting on the throne in Tehran will know their days are truly numbered.

With Iranian President Hassan Rouhani acknowledging the current circumstances as the toughest in the past 40 years for the regime, 2019 is proving to be a year of avalanching crises for Tehran.

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