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Donald Trump moves to cut off Iran oil exports; decision could roil markets

WASHINGTON – Seeking to cut off Iran’s top source of income, the Trump administration announced Monday it would sanction any country that imports Iranian oil, a move that could roil global energy markets.

“The goal remains simple: to deprive the outlaw regime of the funds it has used to destabilize the Middle East for decades,” Secretary of State Mike Pompeo told reporters on Monday.  

Pompeo said the new U.S. sanctions will take effect on May 2 and could hit key U.S. allies, including Japan and India, unless those countries reduce their oil imports to zero before that date. 

The secretary did not directly answer a question whether the Trump administration would use military intervention in Iran.

On Sunday, Axios reported that Pompeo privately told a group of Iranian-Americans that the U.S. would not conduct “a military exercise inside Iran” to bring about regime change. Pompeo offered an ambiguous response when asked about that report.

“We’re happy to get the outcome how ever we can achieve it,” he said. “If Americans are attacked, we will respond in a serious way.” 

He also said the Trump administration is not directly backing a controversial exiled Iranian opposition group known as MEK, for the Mujahedeen-e-Khalq, even though prominent Trump allies, including the president’s lawyer Rudy Giuliani, have spoken at the group’s events. 

“We’re supporting the Iranian people, not any particular group,” Pompeo told reporters on Monday.

Pompeo said the oil sanctions would reduce Iran’s ability to fund terror groups and spread its influence across the Middle East. He said up to 40 percent of the regime’s revenue comes from oil.  

He also said the administration had worked with Saudi Arabia and the United Arab Emirates to ensure “market stability” and try to stave off a spike in oil prices.

The White House said in a statement that Saudi Arabia, the United Arab Emirates, other allies, along with the United States itself, would increase oil production for sale to other nations and “are committed to ensuring that global oil markets remain adequately supplied.”

“We have agreed to take timely action to assure that global demand is met as all Iranian oil is removed from the market,” the White House statement said.

More: Iran sanctions: Trump administration exempts eight countries, including China, from new penalties

More: President Trump’s sanctions bring fear and misery for Iran’s air travelers, aviation industry

The move is part of the administration’s “maximum pressure” strategy to isolate Iran’s regime and strangle its economy. That campaign has included withdrawing from the Iranian nuclear agreement.

The administration first targeted Iran’s oil sector last fall with sanctions, pressuring other countries to stop importing Iran’s oil. But at the time, the State Department granted waivers to eight countries – including key U.S. allies such as South Korea, Japan and India – from the sanctions. The waiver list also included China and Turkey.

Officials said at the time that was designed to allow those countries time to reorient their oil industry to new suppliers.

CNBC, noting that the energy industry had expected Trump to extend the waivers, reported that “oil prices spiked to nearly six-month highs on the surprise news.”

Trump defended the new sanctions in a tweet Monday morning, in which he also attacked the Obama administration and Pompeo’s predecessor at the State Department. 

 

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