Iran’s economic outlook looks dire as US exerts ‘maximum pressure’ on oil exports

Iran’s economic outlook looks dire as US exerts ‘maximum pressure’ on oil exports

The US will begin enforcing sanctions on all Iranian oil exports from today. While Iranian oil sanctions were reintroduced on

iran oil sanctions

Photo: Ali Mohammadi/Bloomberg

The US will begin enforcing sanctions on all Iranian oil exports from today.

While Iranian oil sanctions were reintroduced on November 4, the US waived sanctions for Iran’s largest oil purchasers, including China, India, South Korea, Japan and Turkey. These waivers end today.

Iranian oil exports make up two-thirds of all exports and have more than halved in the past year, heaping pressure on the economy. In figures released this month, the IMF forecast inflation will hit 37% this year and the economy will contract by 6% (only Venezuela’s recession is deeper).

After withdrawing from the Iran nuclear deal last April, the Trump administration has embarked on a so-called “maximum pressure” campaign to force Tehran back to the negotiating table. Last May, US Secretary of State Mike Pompeo outlined 12 conditions for a new ‘nuclear’ agreement, including constraints on Iran’s missile program and ceasing support to groups in Lebanon, Yemen, Palestine and Iraq.

Tensions between Iran’s reformist faction—led by President Rouhani—and hardliners have been mounting. As has popular unrest. In December 2017, protests were sparked by economic dissatisfaction and reappeared in April 2018.

More protests are likely to emerge in the coming months as economic conditions continue to worsen. While regime change remains an unlikely prospect, Iran is also not expected to come to the negotiating table—preferring instead to gamble on a change of regime in Washington come 2020.

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