US Decision to End Iran Exemptions Will Have Larger Impact Than Previous Iran Sanctions, Lawyer Says
The Trump administration's decision to end exemptions for Iranian oil sanctions will have a “more tangible impact on business” than many of the administration's previous sanctions designations against Iran, according to Johann Strauss, an international trade lawyer at Akin Gump. The move, announced by Secretary of State Mike Pompeo on April 22, was aimed at choking off Iran’s oil exports and came about a week after the Treasury’s Office of Foreign Assets Control announced it was designating Iran’s Islamic Revolutionary Guard Corps (see 1904220021).
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But the two announcements had key differences, Strauss said, and will likely affect U.S. trade in separate ways. While the IRGC sanctions won’t have much impact on businesses, mostly because companies had already stopped transactions with Iran to avoid penalties from the U.S., Strauss said the decision to end exemptions will have a larger ripple effect. “This impact is likely to be acutely felt by companies in countries that received the exception and continue to purchase Iranian crude -- such as India and China,” Strauss said in an email. Along with India and China, the move will impact importers in three other major countries, according to the Associated Press: Japan, South Korea and Turkey. The current set of exemptions expires in early May, the White House said in a statement.
The end of the exemptions also will likely affect oil industries worldwide, Strauss said. “Another area to watch for is the impact that this measure will likely have on global oil markets, which have been hit in recent weeks by U.S. sanctions on Venezuela and its state-owned oil company [Petróleos de Venezuela].”