Trump Tightens Iran Sanctions Resulting in Lower Oil Prices

Following President Trumps decision to tighten sanctions on Iran, Saudi Arabia cut June pricing for all crude oil grades to the US. According to Reuters Africa, President Trump called Saudi Arabia and OPEC and told them to lower oil prices. In addition, Saudi Arabia is increasing prices for most other countries. Tighter sanctions in place and Trump’s demand for lower oil prices result in an Art of the Deal style win.

As with the booming economy, President Trump’s business and negotiation experience lends its hand to Making America Great Again. Having an experienced businessman in office versus a politician refocuses America’s priorities. Trump is beholden to no one except American citizens. Because of this, Trump makes decisions in favor of America and not the biggest donor.

Saudi Arabia, the world’s biggest oil exporter, cut June pricing for all crude grades to the U.S. and raised most pricing to other regions https://t.co/WuStkKvgbP — Bloomberg (@business) May 5, 2019 Archive.is

Trump Administration Ends Waivers for Iranian Oil Buyers

In April 2019, the Trump Administration announced that it will not renew waivers that allowed countries to purchase Iranian oil without facing US sanctions. “This decision is intended to bring Iran’s oil exports to zero, denying the regime its principal source of revenue,” White House Press Secretary Sarah Sanders said. According to Secretary of State Mike Pompeo regarding tighter Iran sanctions “The goal remains simple: to deprive the outlaw regime of the funds it has used to destabilize the Middle East.”

As sanctions continue to get tighter for Iran, the country has fallen into a deep recession. Inflation in Iran has reached 40% and its economy is on the decline. Meanwhile, Iranian currency has virtually collapsed. While economic sanctions historically do not always result in regime changes, the Trump Administration has seen some success with North Korea and ending their nuclear program following sanctions. In addition, the administration is clear that the norm of economic sanctions resulting in a deal is not their goal.

The Saudi Arabian decision to lower prices of crude oil to the US appears to be in response to concerns of supplies to the US, after the Iranian oil waivers ended. In addition, they will still benefit from increasing oil prices to other countries. However, as of May 1, 2019, any country who buys oil from Iran will face US sanctions. The decision to apply sanctions on other countries will have to be weighed against our relationship with them. Especially our closest allies.