On Monday, the White House announced that the United States would not extend sanctions waivers for countries importing Iranian oil. That might serve President Trump’s interests in pressuring Iran, but it will have consequences for the broader market. The clear winners are other major producers, such as Saudi Arabia and the United Arab Emirates.
The waivers, lasting 180 days, were issued last November to eight countries that imported Iranian oil. The idea was to give them time to find other energy sources before the U.S. continued with its maximum pressure campaign to squeeze Iran’s regime. Now that time frame is nearly up, the U.S. won’t be renewing the exemptions even though several countries still import Iranian oil.
That means that ending the waivers will likely send a shock through oil markets, and oil prices have already shot up in response to initial reports on Sunday that the waivers would not be extended.
In a Monday press release, the Trump administration outlined its plan to prevent the worst of these shocks: increased production from Saudi Arabia and the UAE.
On its face, that might sound like a great solution. In one move, the U.S. can pressure Iran’s regime and give its Saudi and Emirati allies a boost with a greater market control and new business.
In doing so, however, the U.S. also ties itself even more closely to the interests of Saudi Arabia and the UAE. That weakens Washington’s leverage to pressure Saudi Arabia over its action in Yemen’s Civil War or human rights violations, such as the brutal murder of U.S.-based journalist Jamal Khashoggi.
Relying on Saudi Arabia and the UAE to prevent a jump in gas prices also ties U.S. domestic policy to foreign policy. Trump, who will want to maintain affordable gasoline through the 2020 election, needs to take serious action to hold Saudi Arabia accountable.
Although Trump has shown little interest in actually addressing Saudi Arabia’s actions and vetoed an attempt to rebuke U.S. support for the Saudi coalition in Yemen, he’s even less likely take action now that the waivers have once again reinforced U.S. dependency on Saudi Arabia to achieve its objectives.
