On the 22nd of April, the President of the United States of America (U.S.A.,) Donald Trump, decided to stop its allies from buying oil from Iran. According to the White House, the waivers for China, India, Japan, South Korea and Turkey would expire on the 2nd of May, post which these countries are prone to facing the United States’ sanctions themselves.
Announcing the end of the waivers in Washington, the White House Press Secretary Sarah Huckabee Sanders said: “Trump has decided not to reissue Significant Reduction Exceptions (SREs) when they expire in early May. This decision is intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue.”
Retaliating to the statement by the White House, Iran said it will close the Strait of Hormuz. The Strait of Hormuz is a major naval channel through which a fifth of the global crude oil passes.
The immediate result of this announcement is going to be seen in a sharp spike of crude oil prices. To ensure there is no disruption in the oil production, the United States is going to start working closely with Saudi Arabia and the United Arab Emirates.
The United States came up with the decision of ending the sanctions as a way to cripple Iran’s growth, whose major source of income is through the oil industry.
When President Trump announced the breakthrough of the deal, Iran reacted by saying this move was not legal and had no value or credibility to the waivers.
The U.S.A., Secretary of State Mike Pompeo said, Mr.Trump’s decision not to renew the waivers showed his administration was “dramatically accelerating our pressure campaign in a calibrated way that meets our national security objectives while maintaining well supplied global oil markets”.
While countries like Japan and South Korea already reduced the amount of oil they import from Iran, countries like Greece, Italy and Taiwan completely stopped their intake.
India and China are still hoping for a way out of this and are looking forward to being able to buy more oil from Iran in the coming months.
Stay tuned for more updates.
