what is the Iran and American government oil issue - letsdiskuss
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what is the Iran and American government oil issue


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In 2015, Iran went into an agreement with several countries, including the USA, on its nuclear program. The deal has many clauses. But they don’t concern here.

The simple idea behind that deal was that the international community was worried about Iran’s reckless nuclear development. So, they asked the country to limit its nuclear activities or risk economic sanction from those countries who signed this deal.

Letsdiskuss (Courtesy: NDTV)

This deal is known as Iran Nuclear Deal or Joint Comprehensive Plan of Action (JCPOA).

However, in 2018, US President Donald Trump pulled out from this deal.

He said, “We cannot prevent an Iranian bomb under the decaying and rotten structure of the current agreement,” announcing that the United States is withdrawing from the Iran Nuclear Deal.

(Following, experts believed that with the USA out, the deal remains just for the namesake!)

After US President Donald Trump pulled out of the deal, he re-imposed many economic sanctions on Tehran. In that process, in November, he asked five other countries to follow his suit by not purchasing oil from Iran and hurting the country’s economy. These five countries include China, India, Japan, South Korea, and Turkey.

Iran Nuclear Deal (Courtesy: The Times of Israel)

In November, he offered a 6-month waiver to these five countries – a waiver that has now ended. This is why this topic is back in the mainstream.

Now, it depends on how these five countries will respond to the US’s request/demand. Will they stop importing oil from Iran? Or will they defy USA’s will and continue their relationship with Tehran?

Market pundits believe that China will continue its relationship with Iran – as it is the only country that remains at par with the USA economy. Meaning, the bad relationship between China and the USA will hurt the USA just as much as it would do to China. (It was evident when China stood its ground during the peak of the US-China trade war.) So, China is in a much better position to bargain and cower down the USA on its insistence to hurt Iran’s economy through sanctions.

Donald trumph (Courtesy: DW.com)

As for India, Business Today reports that the country is ready to comply with Trump’s demand. It has already arranged for alternate sources (like Saudi Arabia) to import oil. Per officials, if the USA doesn’t allow any more waiver, India will stop importing crude from Iran.

(Remember, India is the second largest buyer of Iranian crude oil. China is the first one!)

As for the remaining three countries, not much is known about what they will do now.

This is the whole Iran and American government oil issue.

Of course, there are many dynamics to it that you must understand.

For instance, Iran is a powerful country, which won’t remain silent to such sanctions. It has already threatened to close Strait of Hormuz, one of the world’s most strategically important choke points, which, if closed, can hurt the whole global economy.

IRAN (Courtesy: CNBC)

Also, you must consider the role China can play here. It’s unlikely that it will bow to the USA’s demand. It will continue its relations with Iran. If that happens, the trade war between USA and China can escalate, which would be bad for the global economy.

In addition, we also must focus on the takes of the other participating members of the Iran Nuclear deal.

Hopefully, this answers your question.