Trump offers Iran an economic lifeline — with strings
Iran has seen a speedy rebound in oil exports after the US-Iran deal granted immediate waivers on US sanctions. Relief on frozen assets and a
Iran has seen a speedy rebound in oil exports after the US-Iran deal granted immediate waivers on US sanctions. Relief on frozen assets and a $300 billion reconstruction fund now hinge on Tehran meeting key conditions. Iran faces a long and bumpy road back from its nearly four-month war with the United States and Israel. Before the Iran conflict erupted, the country was already grappling with years of sanctions and international isolation tied to its nuclear program that had cut oil exports — its main income source — roughly in half. The Iranian economy was in dire straits, with inflation close to 50% and severe shortages of basic goods. The war caused a further 10% economic contraction, analysts say, including infrastructure damage and lost oil exports. The memorandum of understanding (MOU) agreed on June 17 offers immediate relief through US sanctions waivers, allowing Tehran to ramp up exports of crude oil and refined petroleum products. The 60-day waivers also cover shipping, insurance and banking transactions, putting the Islamic Republic in a stronger legal and financial position than before the war. Ali Vaez, Iran Project Director at the International Crisis Group, believes the MOU gives Iran some "immediate economic relief," which is desperately needed. "Even with the ability to sell oil to China, the Iranian regime was really struggling to keep the lights on prior to the conflict," Vaez told DW. The other elements of the deal — including the unfreezing of assets and a proposed $300 billion reconstruction fund — remain conditional and could take months or years to materialize.
Iran's oil exports have ramped up quickly as crude was ready-loaded onto stranded tankers Image: Fatemeh Bahrami/Anadolu Agency/picture alliance Oil exports rebound sharply after waivers Iran had been exporting oil in defiance of those sanctions for years, relying on a shadow fleet of tankers and heavily discounted sales, mostly to China, to generate revenue. Even after the war began in late February, limited shipments continued despite the effective closure of the Strait of Hormuz. Volumes plummeted to around 64,000 barrels per day under the US naval blockade, according to maritime tracking data from TankerTrackers. With the MOU in place, the country can now secure better prices for its oil, which until now has been mostly delivered to independent Chinese refiners at well below market rates — up to $15 lower than the price of Brent crude. Iran also struggled to bring that Chinese income home, with much of the revenue stuck in escrow or clearing accounts. This meant it couldn't be used to import vital goods or for government spending. The new waivers explicitly cover banking transactions, which should help free up those funds. Richard Nephew, a senior research scholar at Columbia University, told The Wall Street Journal that Iran could generate about $8 billion in oil revenue during the initial waiver period. Iran's oil exports have already rebounded sharply, with 36 million barrels leaving through Hormuz since June 15, according to TankerTrackers. That's the equivalent of more than 5 million barrels per day.
The BriefWire