BUSINESS US oil embargo on Iran counterproductive, say experts

BUSINESS

US oil embargo on Iran counterproductive, say experts

Xinhua

05:38, May 04, 2019

white house ap.jpeg

The US White House. (File photo: AP)

WASHINGTON, May 2 (Xinhua) -- The initial 180-day waivers Washington granted to buyers of Iranian oil expired on Thursday. Experts argued that Washington's intention to cut off Iranian oil exports completely might backfire both at home and abroad.

The White House announced on April 22 the US sanctions would be reimposed on all countries that import oil from Iran from Thursday on.

"We are taking Iran to places that have never been economically, in order to have them change their behavior," Brian Hook, US special representative for Iran, told Xinhua.

On the Iranian side, Iranian Foreign Minister Mohammad Javad Zarif said Thursday Iran would never bow to the US pressures.

"We will find a way (to deal with the US pressures). We have done that for 40 years, and will do that now too," Zarif said in the Qatari capital of Doha.

Barbara Slavin, director of the Atlantic Council's Future of Iran Initiative, called Washington's decision "counterproductive."

"It is counterproductive because it is not going to bring Iran back to the negotiating table and it is not going to change Iran's regional posture significantly," Slavin argued in an article issued by the Atlantic Council, a Washington-based think tank.

In response to Washington's hostility, Iran could retaliate by making it harder for Washington to reach a peace deal with the Taliban in Afghanistan, Slavin said, adding that Tehran could also put pressure on Iraq to expel US troops and make the situation in Yemen even worse.

It is also widely expected that Washington's move would face pushback from major importers of Iranian oil.

Turkey said it would not accept sanctions on oil imports from Iran and warned that the US move to end exemptions "will not serve regional peace and stability."

While in Japan, the country's Industry Minister Hiroshige Seko said last month that Japan's relationship with Iran is important, adding Japan would seek to avoid the harmful effect on its energy supply by US decision.

Earlier this week, US Secretary of State Mike Pompeo said the United States would seek to stabilize global oil market after Washington's decision not to grant sanctions waivers for Iran oil purchase.

"We are convinced we can make sure the markets are adequately supplied. We are continuing to work on that," he said during an event by The Hill news outlet.

Although the White House had repeatedly claimed that Saudi Arabia and the United Arab Emirates (UAE) would cooperate to offset the loss of Iran's oil on the market, Washington could face an uphill battle to stabilize the market.

Saudi Arabia said they would "in the next few weeks" coordinate with other oil producers to ensure oil supplies, while UAE Energy Minister Suhail Al-Mazroui noted that his country would do "what is required to balance the market."

Randolph Bell, director of the Atlantic Council's Global Energy Center, argued that Saudi's vague statement implied that they might take advantage of the higher prices in the near term.

Given the ongoing unstable situations in Venezuela and Libya, two major oil suppliers, observers believed the global oil price would stay at a high level in the near future.

That is something US President Donald Trump does not want to hear. According to media reports, Trump had tweeted over ten times regarding the oil price during his first two years of presidency.

"Trump's oil fixation comes from a recognition of oil's pivotal role in the economy," US political news outlet POLITICO commented.

"Rising gasoline prices, which can quickly burn through consumer pocketbooks, have been associated with most US recessions since World War II," it noted.

In his piece for Oilprice.com, oil markets analyst Tim Daiss called Trump's decision of ending the waivers as "shooting himself in the foot," especially as the 2020 presidential election cycle kicks off with voters already anxious over higher gasoline prices.


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