After 50 days, US oil sanctions bite. Exports drop from 2.5 million barrels per day in April to 1.6 million at present. Reacting to the crisis, Iran plans to introduce electronic vouchers for ten million poor people.
Tehran (AsiaNews) – Less than 50 days after the second batch of US sanctions against Iran came into effect, Iran’s oil exports have dropped substantially, causing “severe economic damage” to Iran, Bloomberg reports.
Since April, the month before Trump announced new sanctions, Iranian oil exports dropped by 35 per cent. In May, the US president cancelled the Joint Comprehensive Plan of Action (JCPOA), imposing new sanctions against Tehran, the toughest in history.
"Iranian oil exports are coming down pretty hard," said Roger Diwan, a veteran oil analyst at consultant IHS Markit Ltd.
Despite opposition by Europe, China and India, the US decision has caused a significant slowdown in the Iranian economy after years of marked growth. And poor Iranians are the first the pay.
Although oil sanctions come into effect on 4 November, US threats have pushed European and Asian buyers (especially in India and Japan) to cut their purchases.
In the first two weeks of September, Iran sold an average of 1.6 million barrels a day, down from 2.5 million barrels a day in April, according to Bloomberg tanker tracking.
When sanctions on crude oil and natural gas come into effect in November, European nations and Japan are likely to stop buying Iranian oil.
This will likely further reduce the country’s exports, which might easily drop another 350,000 barrels a day by November, down to about 1.3 million.
South Korea, a major importer of Iranian crude in the past, hasn’t shipped any oil from Iran for 75 days.
Oil accounts for nearly 80 per cent of Iran’s tax revenue, according to the International Monetary Fund, making petroleum the regime’s economic lifeblood.
As oil exports have plunged, so has Iran’s currency. The rial has lost so far 60 per cent on the unofficial market, pushing up inflation.
However, despite its actions, Washington will not succeed in stopping Iranian oil exports, experts say, nevertheless, the decline will be felt as the Iran’s economic crisis worsens.
The Iranian government’s response includes a plan that hadn out electronic vouchers to about ten million underprivileged Iranians to be used for “fair distribution” of rationed essential goods at subsidised prices.
At present, little is known about the plan or whether it will replace existing government cash subsidies. What is certain is that the goal is to stop inflation, especially of essential items like bread, rice, sugar and flour, which are becoming increasingly expensive for many Iranians.
For many, the new voucher system is a throwback to the coupons issued during the Iran-Iraq war in the 1980s.