Iran's oil will get shut in

Ten years ago, the Iranian rial was trading at 9,315 to the US dollar.  Today it is at 44,000 to the dollar on the "official exchange rate," but on the unofficial or "black" market, what the street-side money changers go for, the rate is 110,000 rials for one US Dollar.  So, in short, the Iranian currency has been devalued and debased by a factor of 1,100 percent in a decade.  

OK< that is not quite Venezuela, but still, it points to a massively struggling economy, one that is incapable of withstanding any external pressures.  And the US is quite prepared to exert massive pressures, including secondary boycotts.  A secondary boycott is when the USA not only boycotts, or embargoes, the primary target (Iran), but also anyone who does business with Iran.  At this point, Iran has a huge contract with both Boeing and Airbus to replace its fleet of creaky old planes.  As of Monday, anything not delivered and paid for will go into the Black Hole of the Embargo, and will not trade.  If Airbus were to sell the planes to Iran in defiance of the US Embargo demands, then Airbus would be banned from selling anything into the USA - so Airbus knuckles under and has declared they will obey the boycott. 

Can Iran Air buy new planes somewhere else?  But of course; they can go buy airplanes from Tupolev over in Russia. But, their currency has devalued by a factor of three in the last eight months, so those planes are now effectively three times more expensive tan they were last December.  And this is what it costs you if you want to confront the USA and go toe-to-toe with The Donald.  

Remember that the Oil Embargo (and the secondary embargoes for oil buyers and vendors) will not hit until November.  As oil sales is roughly 85% of Iran's economy, how it will survive that is anyone's guess.  Iran probably could if it was only the USA that it had to deal with in an embargo, but now Trump's secondary boycotts will make it so intractable that I don't see any hope of Iran being able to hold on.  Economic collapse is coming soon.  How that instability will play out in that part of the world is anybody's guess.  And PS:  don't expect that China will defy the Sanctions and buy oil there, at least not directly, not without plausible deniability, China is far too dependent on the US markets to take that chance. 

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