Iranian Sanctions - What Are The Facts?

[Matt M. + 1]

Hopefully Trump's and other american politician's mistakes will increase the oil price; then some of the deactivated projects will reactivate and we will find more opportunity for employment. Hope to meet those days soon!

[Bilal Zaidi + 13]

On 10/10/2018 at 10:12 AM, Dan Warnick said:

This topic has been discussed so much on Oil Price, but most of the information has come from "news reports" that may or may not have merit.  The real information is at the U.S. Government's websites: U.S. Department of State - Iran Sanctions, U.S. DEPARTMENT OF THE TREASURY - Iran Sanctions and also the Federal Register, Presidential Executive Order 13846 of August 6, 2018 - Reimposing Certain Sanctions With Respect to Iran

There may be more documents that relate to the sanctions since a number of U.S. Government agencies are involved.  If you find other information of interest, please bring it to the discussion.

Please review the documents above if you wish to find out the details but, to get the discussion going, here is what I understand to be the highlights from my perusal of the referenced documents:

The bit about paying (in India's case) in rupees, while certainly a topic being discussed these days, does not seem to relate to the U.S. Sanctions at all.  The sanctions that will be re-imposed* on November 4th are simply about buying oil from or participating in oil industry activities in or with Iran, not about dollars or any other currency.  Meaning if you buy oil from Iran or participate in any business related to its oil ports or oil infrastructure after November 4th, your financial assets or transactions in or passing through the United States will be more or less frozen or simply not accepted/revoked, any insurance underwriter that insures such cargos are also prohibited from participating and/or providing insurance, you will be subject to large $$ fines, and you are not even allowed to access or use electronic financial information from U.S. financial institutions you normally use.  I went to the U.S. State Department, the U.S. Treasury Department and the White House websites for a detailed review and it is complex, to say the least, but I believe the above are the key components.

In all sanctions-related legal documents (they are all laid out in detailed long-form legal format) the terms are strong and pretty unforgiving.  The possibility of waivers, while discussed, is meant to be extremely rare and only to be used while a country continues to wind down oil business with Iran.  Reasons given include a) the fact that every country has already been given at least 180 days to wind down such activities and to find alternate supplies, and b) the U.S. Government's target is to cut Iran's oil revenues to ZERO in order to bring them to the point of completely ceasing nuclear weapon development. 

I recently speculated that a country could possibly purchase their future oil supplies so long as they paid before November 4th; that is true to a limited extent as covered in the U.S. Government documents, but any country that wishes to do so must lay out a detailed need and a plan for the continued wind down of deliveries, usually within a few weeks or months.  In other words, you can't buy a year's worth of oil in advance.

*These sanctions were initially imposed BEFORE the Trump administration by the Obama administration, who also lifted them just prior to the end of his term when he signed the treaty that Trump later revoked.

Hi Dan, I suppose the idea of bringing the Iran's oil income to zero specially when US's European friends are not on same page they are looking for alternate payment system excluding US is a far cry at the moment but they are working on it, it also seems US standing aloof from European countries and some of the middle eastern countries will not this isolate US from World. It is a tough decision took by Trump administration on the other hand weapon race ready to escalate since opting out of Russian agreement the things are getting extremely complex than ever in the history. The things in near future not going to be nice. You may disagree with my opinion. 

I am not sure how US people are looking at it and will react in November elections. 

[Dan Warnick + 6,100]

19 minutes ago, Bilal Zaidi said:

Hi Dan, I suppose the idea of bringing the Iran's oil income to zero specially when US's European friends are not on same page they are looking for alternate payment system excluding US is a far cry at the moment but they are working on it, it also seems US standing aloof from European countries and some of the middle eastern countries will not this isolate US from World. It is a tough decision took by Trump administration on the other hand weapon race ready to escalate since opting out of Russian agreement the things are getting extremely complex than ever in the history. The things in near future not going to be nice. You may disagree with my opinion. 

I am not sure how US people are looking at it and will react in November elections. 

Hi Bilal.  Please browse around the topics already in discussion topics here on Oil Price.  Most of the answers are already covered.  Thanks.

You, and many others, are mistaken when you read about alternate currencies being a way to get around the sanctions.  IF the U.S. enforces the sanctions, and they may well decide to strictly do so, it is not (only) the cash used to buy oil that will be frozen; it is ALL financial assets or transactions in or passing through the United States will be more or less frozen or simply not accepted/revoked, any insurance underwriter that insures such cargos are also prohibited from participating and/or providing insurance, you will be subject to large $$ fines, and you are not even allowed to access or use electronic financial information from U.S. financial institutions you normally use.

As for isolation from the world, (and this has also been discussed on other threads that are still open) the American voters have given Trump a mandate to look after the United States first, the world: 2nd.  

Weapon Race:  Also being discussed on another thread right now.  Russia is ignoring the agreement, producing banned missiles, and lining the European borders with Russia with those missiles.  The U.S. is pulling out of the agreement and threatening to retaliate, repeat retaliate (meaning act in response) to Russia breaking the agreement already.  The U.S. is simply saying "If Russia ignores the agreement, then we will officially cancel the agreement and take a defensive position".

About the mid-term elections.  Well, they said Trump would never, never, never be elected in the first place.  So it is more than likely that Trump's party will win the mid-terms.  The Republican Party already controls both houses of Congress.  They will either lose the majority, maintain the majority, or win an even bigger majority in the mid-term elections.  Yes, it will be interesting to see what happens.

Edited October 25, 2018 by Dan Warnick

[Bilal Zaidi + 13]

59 minutes ago, Dan Warnick said:

Hi Bilal.  Please browse around the topics already in discussion topics here on Oil Price.  Most of the answers are already covered.  Thanks.

You, and many others, are mistaken when you read about alternate currencies being a way to get around the sanctions.  IF the U.S. enforces the sanctions, and they may well decide to strictly do so, it is not (only) the cash used to buy oil that will be frozen; it is ALL financial assets or transactions in or passing through the United States will be more or less frozen or simply not accepted/revoked, any insurance underwriter that insures such cargos are also prohibited from participating and/or providing insurance, you will be subject to large $$ fines, and you are not even allowed to access or use electronic financial information from U.S. financial institutions you normally use.

As for isolation from the world, (and this has also been discussed on other threads that are still open) the American voters have given Trump a mandate to look after the United States first, the world: 2nd.  

Weapon Race:  Also being discussed on another thread right now.  Russia is ignoring the agreement, producing banned missiles, and lining the European borders with Russia with those missiles.  The U.S. is pulling out of the agreement and threatening to retaliate, repeat retaliate (meaning act in response) to Russia breaking the agreement already.  The U.S. is simply saying "If Russia ignores the agreement, then we will officially cancel the agreement and take a defensive position".

About the mid-term elections.  Well, they said Trump would never, never, never be elected in the first place.  So it is more than likely that Trump's party will win the mid-terms.  The Republican Party already controls both houses of Congress.  They will either lose the majority, maintain the majority, or win an even bigger majority in the mid-term elections.  Yes, it will be interesting to see what happens.

Let's just wait and see how things take shape in global economy. 

[Guillaume Albasini + 851]

7 hours ago, Dan Warnick said:

You, and many others, are mistaken when you read about alternate currencies being a way to get around the sanctions.  IF the U.S. enforces the sanctions, and they may well decide to strictly do so, it is not (only) the cash used to buy oil that will be frozen; it is ALL financial assets or transactions in or passing through the United States will be more or less frozen or simply not accepted/revoked, any insurance underwriter that insures such cargos are also prohibited from participating and/or providing insurance, you will be subject to large $$ fines, and you are not even allowed to access or use electronic financial information from U.S. financial institutions you normally use.

If passing through the United States is increasingly meaning a risk to be subject to US sanctions, the rest of the world will increasingly avoid the US for the financial transactions and other solutions bypassing the US will attract more interest..

[Dan Warnick + 6,100]

1 minute ago, Guillaume Albasini said:

If passing through the United States is increasingly meaning a risk to be subject to US sanctions, the rest of the world will increasingly avoid the US for the financial transactions and other solutions bypassing the US will attract more interest..

Go for it!  Let me know how that works out.

[Bilal Zaidi + 13]

48 minutes ago, Guillaume Albasini said:

If passing through the United States is increasingly meaning a risk to be subject to US sanctions, the rest of the world will increasingly avoid the US for the financial transactions and other solutions bypassing the US will attract more interest..

Yes the European countries already thinking on new payment system and working on its modalities although it is on drawing board this system will keep Iran business with the European Union but the problem is in the past Iraq started trading in Euro and then WMD issue was raised and ruined so let's see how things will shape up how European Union stands on their stance to keep Iran in business.

[Dan Warnick + 6,100]

40 minutes ago, Bilal Zaidi said:

Yes the European countries already thinking on new payment system and working on its modalities although it is on drawing board this system will keep Iran business with the European Union but the problem is in the past Iraq started trading in Euro and then WMD issue was raised and ruined so let's see how things will shape up how European Union stands on their stance to keep Iran in business.

This is my last attempt at this:  If the EU buys oil from Iran, in any currency, ALL EU business conducted within the U.S. and all EU investments in the U.S., and all assets of any individual (or company or government) in the U.S. or passing through the U.S., ALL OF THEM, would be subject to the sanctions with the risk of being frozen and the risk of large fines being levied against them, which could ultimately be seized from U.S. accounts held by them under the sanctions.

Like I said, this is my last attempt to make you understand.  I will leave it to others to continue with you if they so wish.

Sorry if this is just a language barrier issue.  I mean you no disrespect.

Edited October 26, 2018 by Dan Warnick

[Dan Warnick + 6,100]

China Cuts Iran Oil Purchases Ahead of U.S. Sanctions

 

[BHUPINDER KUMAR + 6]

shall be grateful if some one can guide me how the Iran sanctions/ claims by the Iran President that they will drown the cargo/ US mid term election will impact the Indian Oil Industry ....

[Mike Marcellus + 157]

15 hours ago, Guillaume Albasini said:

If passing through the United States is increasingly meaning a risk to be subject to US sanctions, the rest of the world will increasingly avoid the US for the financial transactions and other solutions bypassing the US will attract more interest..

This is sound logic.  The U.S. is the safest place to conduct business, but we should not take it for granted.  Russia, China, Iran, all of these countries would like to be your 3rd party moderator, insurer, referee.  So like Dan invited.... trust them if you want.

The real threat to the U.S. losing it's power position is the same threat to all middle men, efficiencies of block chain platforms substituting trust with an incredibly tamper-evident platform that highlights cheating/stealing for all to see.   

[Dan Warnick + 6,100]

3 minutes ago, Mike Marcellus said:

The real threat to the U.S. losing it's power position is the same threat to all middle men, efficiencies of block chain platforms substituting trust with an incredibly tamper-evident platform that highlights cheating/stealing for all to see.

This may be.  Where do you think the winning secure block chain platforms will come from/be located?

[Mike Marcellus + 157]

7 minutes ago, Dan Warnick said:

This may be.  Where do you think the winning secure block chain platforms will come from/be located?

Are you asking about who oversees the specific platforms for say... oil trading,   life insurance,  or buying a house?  Its de-centralized concept allows all to see.  They won't need us because they trusted us or our methods anymore.

I'm not sure it will be in the U.S.  Supposed inventors of the platform were Japanese I believe.   I want to think and still considering IBM. 

It's a big world, and the rest of the world would only need to stick together for a very short period of time to insist that these platforms are international.  Bringing me back to my original thought, we shouldn't take it for granted, that we will remain the world markets clearing house.

[Dan Warnick + 6,100]

3 minutes ago, Mike Marcellus said:

Are you asking about who oversees the specific platforms for say... oil trading,   life insurance,  or buying a house?  Its de-centralized concept allows all to see.  They won't need us because they trusted us or our methods anymore.

I'm not sure it will be in the U.S.  Supposed inventors of the platform were Japanese I believe.   I want to think and still considering IBM. 

It's a big world, and the rest of the world would only need to stick together for a very short period of time to insist that these platforms are international.  Bringing me back to my original thought, we shouldn't take it for granted, that we will remain the world markets clearing house.

You are indeed raising a larger issue, and I agree the possibility exists, especially as block chain develops rapidly.  But, do you think the world is ready to do this in response to sanctions against Iran for nuclear weapons, at this time?

[Mike Marcellus + 157]

3 minutes ago, Dan Warnick said:

You are indeed raising a larger issue, and I agree the possibility exists, especially as block chain develops rapidly.  But, do you think the world is ready to do this in response to sanctions against Iran for nuclear weapons, at this time?

I think Iran, China or Russia should be trying right now.  And they only need one western country,,, better if they belong to the EU to give it a try.  Then the dominos could tumble.  

[Dan Warnick + 6,100]

8 minutes ago, Mike Marcellus said:

I think Iran, China or Russia should be trying right now.  And they only need one western country,,, better if they belong to the EU to give it a try.  Then the dominos could tumble.  

It's a good discussion, and I just closed out my trade (with a nice little profit 😎) let's keep it going, if you have time.

In the current environment, Iran, China and Russia are already battling the U.S. and the position of our Orange one is that we don't really need any of the 3.  If they created a new group effort to move oil around, would we/the U.S. really need to care.  What do Iran and Russia bring to our table?  What does China bring to the table that we could not do without, and that could not be sourced elsewhere?

As for a Western participant in their new "cartel", I would think the U.S. position, at least under a Trump administration, would be that they are free to do so, but he would place restrictions on all of them so that if/when things go awry for any or all them they cannot easily come back into the fold.

What do you think?  And, by the way, anyone else is free to join the discussion if you have your own pros/cons to add and discuss.  TGIF. 

[Mike Marcellus + 157]

1 hour ago, Dan Warnick said:

It's a good discussion,

I ultimately I agree with your first response... go ahead, work around us if you want, but you will regret it.

For the discussion, let's push the domino. China & Iran DO trade oil in broad day light. Oil for Gold. Just slightly under market prices -Not a deep black market type discount. No need for insurance, because it will be delivered C.O.D. Maybe on that new rail system Iran to China ...this deal continues for months.  Soon enough Italy is tired of Germany holding their money and they buy some Iranian oil this way.  Then Libya says hey we can sell oil to Italy cheaper.  ...and the dominos fall and the U. S. no longer gets to collect the crumbs.   Maybe natural gas would be a better commodity.

It wont be a cartel of 3,4, or even 12 countries.  It will be the whole world.  I believe there will still be disputes, there always are, but at this point the the world is participating, they'll figure out solutions. or they wont. 

It wont be a cartel of 3,4, or even 12 countries.  It will be the whole world, we will be hard pressed not to join.

If we play along, we will be welcomed by some, and not by others.  Geo-politics will continue, we just don't get to sanction countries anymore, and keeping our nose in other people's business under the excuse of  "hey, we're picking up the bill" will not be available to us.

  

   

 

 

[Dan Warnick + 6,100]

58 minutes ago, Mike Marcellus said:

If we play along, we will be welcomed by some, and not by others.  Geo-politics will continue, we just don't get to sanction countries anymore, and keeping our nose in other people's business under the excuse of  "hey, we're picking up the bill" will not be available to us.

  

Sorry, went to sleep for a while.

I don't really have any counter for you, this time.  I just don't see it becoming a stable system for more than a couple of years.  I think, considering the players, it would be unmanageable with no real rules of the road, so to speak.

[Mike Marcellus + 157]

18 minutes ago, Dan Warnick said:

I think, considering the players, it would be unmanageable with no real rules of the road, so to speak.

Agreed.  Have a good weekend, congrats on the trade

[Bilal Zaidi + 13]

We all need to listen to this podcast https://player.fm/series/the-economist-radio-all-audio-1539090/the-week-ahead-oil-and-trouble

[jaycee + 348]

Having talked to an oil trader friend, one who actually buys cargoes of oil, he simply said Iranian oil will be sold through Pakistan getting round the sanctions is not difficult that’s how it has been done before.

Regards the world being unable to survive without America managing the trading system the question should be asked is the world happy to continue with America dictating the rules to everyone via their position as the world trade currency when they decide to unilaterally to impose sanctions on a country? I would argue many countries are now wondering who will be next for America to decide to stop everyone trading with so the only option is to isolate America and remove the $ as the world’s trading currency as they have abused their position of trust.

Edited October 27, 2018 by jaycee
Typo

[Guillaume Albasini + 851]

With just days to go before renewed sanctions take effect Nov. 5, the reality is setting in: three of Iran’s top five customers – India, China, and Turkey - are resisting Washington’s call to end purchases outright.

The US administration is split into two camps, one led by National Security Adviser John Bolton, who wants the toughest possible approach, and another by State Department officials keen to balance sanctions against preventing an oil price spike that could damage the U.S. and its allies.

https://www.reuters.com/article/us-iran-nuclear-oil/trumps-iran-sanctions-resolve-faces-test-from-oil-thirsty-china-india-idUSKCN1N30GW