Mnuchin: Obtaining Exemptions from Sanctions for Iran's Oil Customers Will Be Harder Than Before

The U.S. Treasury Secretary has announced that obtaining exemptions from sanctions for Iran's oil customers will be harder than during the previous sanctions period (2012 to 2015). Steven Mnuchin stated in an interview with Reuters in Jerusalem on Sunday, October 21, that countries seeking exemptions must reduce their oil imports from Iran more than the levels set during the Obama administration. During the previous sanctions, Iran's customers had to reduce their oil purchases by 20% every six months. Mnuchin indicated that countries seeking exemptions must significantly reduce their oil purchases from Iran. He also addressed concerns about rising oil prices due to declining Iranian production and exports, stating that there is no need for concern as prices have already risen. Oil prices have increased since the U.S. withdrawal from the JCPOA on May 8 of this year, currently trading above $80, the highest in four years. However, the U.S. Energy Information Administration predicts that oil prices will decrease next year as production rises in the U.S. and other countries. Reuters reports that U.S. sanctions are likely to reduce Iran's oil exports by up to two-thirds. Last year, Iran exported 2.5 million barrels of oil and gas condensates daily, which international assessments indicate has dropped to 1.6 million barrels last month and continues to decline. The second wave of sanctions and foreign investment in Iran will come into effect on November 4, targeting Iran's oil exports. Meanwhile, the European Union is trying to create a mechanism for Iran to receive payment for its oil. The U.S. Treasury Secretary stated that Iran's customers must ultimately stop all oil purchases from the country. 'I don't think Iran's total oil exports will reach zero by next month, but ultimately this will happen.' He noted that the impact of sanctions on Tehran will be significantly visible with the exit of international companies from Iran. Mnuchin mentioned that the U.S. has begun assessing the impact of sanctions and that the effect on Iran's economy will become much clearer with the implementation of oil sanctions, predicting that Iran's economy will face challenges over the next two years. The International Monetary Fund recently forecasted that Iran's GDP will decrease by about $100 billion next year, with this year's GDP slightly above $400 billion. Mnuchin also stated that the U.S. is consulting with SWIFT (the global interbank financial communications organization) to cut Iran's access to this system. During the previous sanctions, the U.S. forced SWIFT to sever ties with Iran. Although the U.S. does not hold a majority on SWIFT's board, it can threaten sanctions against this international entity to cut its relationship with Iran. Mnuchin assured that U.S. sanctions will target financial transfers in any form, whether through SWIFT or otherwise. He stated that the goal of the U.S. is to ensure that the sanctions are effective. According to him, the U.S. Treasury is currently quickly identifying banks that will be allowed to conduct financial transactions for humanitarian goods. The U.S. claims it does not want the sanctions to target the Iranian people or humanitarian issues.