With nearly 50 days to go before new U.S. oil sanctions against Iran enter into force, President Donald Trump has crushed the country’s petroleum exports, dealing severe economic damage to Tehran.
Iranian oil exports have plunged about 35% since April, Bloomberg reports, the month before Trump ripped up the diplomatic deal that Barack Obama negotiated to curtail Tehran’s nuclear program and announced new oil sanctions.
“Iranian oil exports are coming down pretty hard,” said Roger Diwan, a veteran oil analyst at consultant IHS Markit Ltd.
The bigger-than-expected reduction, with more to come, is a win for Trump, who made a tougher stance on Iran a cornerstone of his foreign policy and imposed the sanctions despite opposition in Europe and open hostility from China and India, the top buyers of Iranian crude. When the sanctions were first announced, their unilateral nature prompted many in the oil market to question their effectiveness.
Oil accounts for nearly 80% of Iran’s tax revenue, according to the International Monetary Fund, making petroleum the regime’s economic lifeblood. As oil exports have plunged, Iran’s currency has dived 60% on the unofficial market, pushing up inflation.
While the success of sanctions will help Trump put pressure on Iran, there may be a less welcome side effect: higher oil prices for U.S. consumers in the run-up to November’s midterm elections.
