It has now been made clear that the US has no intention of making any overtures of peace towards Iran. US National Security Advisor John Bolton has stated without ambiguity that he intends to wholly block Iranian oil from the world market. But, can this actually be achieved?
This has all begun with the assault on Iran back in May. The US unilaterally withdrew from the Joint Comprehensive Plan of Action without any just cause for doing so. They allege violations by Iran that went completely without any evidence. The European signatories dismissed the fraudulent claim, asking that the US return to the agreement.
Instead of taking the proper route, US president Donald Trump has refused to admit that he lied in cooperation with fake evidence provided by Israel. His chosen path has been instead to threaten Iran into a new deal that would make the situation much worse for the struggling Middle Eastern country. All of this, with no just cause for doing so at all.
Iran has adamantly rejected the actions of the US and have demanded that they return to the agreement and halt further provocative actions. They have insisted, with the confidence of the European signatories to the deal that they have remained in full compliance with the agreement.
So, can the US actually take all Iranian oil off the international market?
Firstly, the US has already threatened secondary sanctions against anyone who continues to deal in Iranian oil. As the market has shown us, it has been quite effective. From the first half of August, Iranian exports of oil have been reduced by 600,000 barrels per day (bpd). That’s a reduction from 2.32 million bpd to 1.68 million bpd.
Some countries have bowed to US pressure like South Korea. Others, like China, have refused to go along with US demands. It should also be noted that China has also scaled back some of its purchases, but not withdrawing completely. While we can be sure that China will not halt Iranian oil imports, it’s likely that they won’t increase them either.
India is sitting on the fence on the issue. India has cut consumption from 706,452 bpd to 203,938 bpd. But there’s no plausible way they could cut all Iranian oil from the market. As it is they import 80% of their energy resources, a third of which come from Iran. In theory, India could eliminate all Iranian imports and purchase the remaining from the US. As it is, India is wholly dependent upon the US financial system. This can be used to hurt India significantly.
The European Union has refused to reduce their consumption of Iranian oil. They’ve increased it in fact as a part of their compensation to Iran for the US withdrawal from the JCPOA agreement, in order to keep Iran in it. It’s not all good news. Total SA, a French company, has already withdrawn investment from Iran in response to threats from the US.
Overall it seems very unlikely that the US could reduce Iranian oil to zero. There are too many countries who rely upon their supply. However, the US could come very close. Experts estimate that they could be reduced to as low as one million bpd. The rest would be sent to floating storage as they have in previous times.
The final aspect of this is the significant loss of revenue that would deal a tremendous amount of damage to the country. As it is, the Iranian economy is not on solid footing. The loss of such revenue could be immense.