Iran Prepares for Potential Oil Export Cuts Under Trump

Iran is ready to face possible additional sanctions on its oil exports, Iranian Oil Minister Mohsen Paknejad was quoted as saying on Wednesday.

“Required measures have been taken. I will not go into detail but our colleagues within the oil sector have taken measures to deal with the restrictions that will occur and there is no reason to be concerned,” Reuters quoted Paknejad as telling the oil ministry’s news service Shana.

During his first term in office, U.S. President-elect Donald Trump tore up the so-called Iran nuclear agreement, formally known as the Joint Comprehensive Plan of Action (JCPOA), and re-imposed sanctions on Iran’s oil industry and exports in 2018.

Trump now plans to renew the so-called ‘maximum pressure’ campaign against Iran, to further isolate Tehran and hamper its ability to support its proxies in the Middle East, The Wall Street Journal reported last week, quoting sources briefed on the president-elect’s early plans.

President Joe Biden and his Administration, while keeping all sanctions on Iran in place, haven’t monitored strictly the compliance of the sanctions as they were keen to keep oil flowing amidst crises elsewhere such as the Russian invasion of Ukraine.

Now Trump could have a personal issue with Iran and is likely to seek a maximum pressure policy, which could stifle Iranian oil exports that had just hit a six-year high earlier this year.

A major drop in Iranian oil exports, if the U.S. ratchets up the sanctions, could lead to higher oil prices, other things being equal, analysts say.

However, Trump’s other possible policies, notably the import tariffs he has pledged to introduce, could slow down global and U.S. economic growth and consequently, oil demand, other analysts note.

Low Iranian oil exports will also hit China, as it is Iran’s main oil customer buying over 90% of Tehran’s oil cargoes at discounted prices.

By Tsvetana Paraskova for Oilprice.com

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