Circumnavigating US Sanctions: Iran’s Oil Exports Continue

As if US-led tightening sanctions on Iran, with their economic, political and security ramifications were not enough, the USA and the UK were quick to point finger at Tehran for recent attacks on oil tankers in the Gulf of Oman, with Trump calling Iran ” a nation of terror”, stoking fears of a possible confrontation that could set the whole region on fire.

Many crucial and worrying questions arose as the Trump administration stopped sanctions exemptions that had been in place on importing Iranian oil. What impact will this escalation step have on world oil markets? What effect will this move have on Iran’s and other major economies such as China, India, Turkey and Japan, relying on imported Iranian oil and gas? Who will replace Tehran’s massive share in world oil markets, and can they? How much does this jeopardize an already fragile security and safety situation in the Gulf region? And most notably, can Iran and how circumnavigate the smothering US embargo on its oil exporting capabilities?

US sanctions, according to Tehran’s viewpoint, are unacceptable, unfair and amount to a declaration of war, as if military buildup and escalation in the region was not enough.  Both the spiritual, political as well as military leaders in Tehran have made unequivocal declarations following the new US move, to the effect that no one can, and no one shall replace Iran’s share in the oil market, whatever the cost may be. This puts the US and its Arab allies in the Gulf, mainly the UAE and Saudi Arabia on the one hand, and Iran on the other, on the direct path for a major confrontation with unpredictable consequences.

Although Iran is an energy superpower and a founding member of the Organisation of Petroleum Exporting Countries OPEC, it has a sizeable wealth of other natural resources.  Apart from Petroleum, the country’s other natural resources include Natural Gas, Coal, Chromium, Copper, Iron ore, Lead, Manganese, Zinc and Sulphur. Tehran produces an average 1.3 million barrels of crude oil a day, with a similar oil refining capacity.

Over the past two decades, and despite US-spearheaded western sanctions and pressures, Tehran has witnessed a large-scale industrial revolution, with the full meaning of the word. Iran now manufactures over 70% of all its needs, with a striking 100% self-sufficiency in the military sector. It boasts a massive arsenal of missiles of all types and ranges, its own satellites with needed launching capability, sophisticated drones, modern military aircraft and helicopters, a fleet of speed boats, ships and even mini submarines.

What complicates the situation even further, is Iran’s total control and closure capability over the strategic Straight of Hormuz in the Persian Gulf. In case a military confrontation erupts in the region, Tehran has threatened all US military bases as well as other interests in the region will be legitimate targets. The US has a massive base in Qatar, 5th Fleet Regional Command in Bahrain and several bases, military camps and compounds in the UAE, Iraq and Kuwait.

Moreover, in a recent speech less than two weeks ago, Hezbollah’s General Secretary of Ian’s staunchest ally in Lebanon, Hassan Nasrallah made it clear that “any war against Iran shall not stop in Iran itself; the whole region shall be on fire”, an indirect insinuation to targeting Israel and America’s allies in the Gulf region. Hezbollah is believed to possess an impressive arsenal of short and medium-range missiles, including highly accurate rockets totaling well over 100.000 according to reserved estimates.

Therefore, the economic war against the Islamic Republic of Iran if continued to a more crucial point, could easily slide the Gulf along with other Middle Eastern countries into an all-out war with catastrophic repercussions worldwide. If attacking two and sinking a oil tanker a few days ago caused oil prices to rise, one can easily foresee what a major confrontation in the Gulf could do to oil markets and world economies.

Iranian leaders including president Hassan Rouhani have reiterated, since the Trump administration lapsed sanctions exemptions as of 2nd of last May, that although Tehran’s revenue from petrochemical exports equals that of oil, ” if Iran is stopped from exporting its oil, no one else will”.  Recent drone attacks targeting major Saudi oil pipelines claimed by Yemen’s Houthi rebels, further exasperated by recent attacks on oil tankers in the Gulf of Oman, is seen by many as a potential signal in that direction, despite Iran’s utter denial of any involvement whatsoever in the attacks.

Iran’s calm posture and calculated reaction regarding US-led sanctions, seems to qualify recent Iranian confirmations that their oil exports shall continue unabated, and that they have devised a way to do just that. Hence, how does Iran manage to circumnavigate those sanctions, and for how long, remains a question.