- U.S. Considers Delaying Iranian Oil Shipments Through Sea Inspections.
- Trump Revives ‘Maximum Pressure’ Campaign With New Iran Oil Sanctions.
- U.S. Eyes International Accord to Target Iranian Oil Trade.
President Donald Trump’s government is weighing a proposal to board and search Iranian oil tankers on the high seas under an international agreement designed to counter the proliferation of weapons of mass destruction. Trump has pledged to revive a maximum pressure campaign to isolate Iran economically and cut its oil exports to zero, depriving the country of a nuclear weapon, reports Reuters.
Trump’s Second Term
During the early weeks of his second term, two new sanctions were placed on firms and Iran’s “shadow fleet” of older oil tankers that sail without Western insurance. These actions follow the modest sanctions placed by former President Joe Biden’s presidency when Iran could boost its crude exports using complicated smuggling networks.
Inspection of Ships at Critical Chokepoints
Based on six sources close to the issue, U.S. authorities are considering how to allow allied nations to intercept and search vessels travelling through sensitive chokepoints like the Malacca Strait in Asia and other strategic sea routes. This policy would slow down deliveries of crude to refineries and deter parties in the business because of the risks of reputational damage and sanctions.
“You don’t have to sink ships or arrest people to have that chilling effect that this is just not worth the risk,” one source stated. “The delay in delivery … instils uncertainty in that illicit trade network.”
Application of Proliferation Security Initiative (PSI)
The administration is considering whether sea inspections might be made under the Proliferation Security Initiative (PSI), an international initiative introduced in 2003 aimed at preventing weapons of mass destruction trafficking. The U.S. was a leader in creating PSI, signed by more than 100 governments.
This mechanism would enable foreign governments to block Iran’s oil shipments on the request of Washington, effectively postponing deliveries and disrupting Tehran’s revenue sources. The White House National Security Council is considering this option, though it is uncertain if Washington has approached any PSI signatories for assistance.
Iran’s oil exports
John Bolton, the former U.S. lead negotiator for PSI, told Reuters: “It would be fully justified” to use the initiative to slow down Iran’s oil exports. “Selling oil is obviously critical to raise revenue for the government of Iran to conduct both its proliferation activities and support for terrorism.” Neither Iran’s oil ministry nor its foreign ministry has responded to requests for comment.
Iran’s Response to Sanctions
Iranian President Masoud Pezeshkian addressed the Iranian parliament on March 2, acknowledging the impact of Trump’s renewed sanctions: “Trump has once again signed an order sanctioning many of our ships at sea, leaving them uncertain about how to unload their oil and gas cargo.”
Possible Risks and Retaliation
Iran has in the past retaliated against efforts to capture Iranian oil cargos. During the Biden administration, the U.S. tried to interdict a minimum of two shipments of Iranian oil in 2023. As a retaliation measure, Iran seized foreign vessels, one of them being a vessel chartered by Chevron Corp (CVX.N), prompting the price of oil to increase. The existing low oil price climate provides Trump with greater leverage to impose more aggressive measures, including sanctioning tanker firms or even confiscating vessels, said Ben Cahill, an energy analyst at the University of Texas’s Center for Energy and Environmental Systems.
“I think if prices stay below $75 a barrel, the White House has more latitude to look at sanctions that would affect, you know, supply from Iran and other countries. It would be much harder to do this in a $92 per barrel environment,” Cahill said. He estimated that aggressive U.S. measures could initially cut Iran’s exports by around 750,000 barrels per day, but long-term sanctions may become less effective as Iran and buyers develop alternative methods to bypass restrictions.
Influence on World Oil Markets
The sudden resumption of Iraqi Kurdistan’s oil exports might counter a dip in Iranian shipments. Reuters has earlier indicated that the White House is trying to pressure Iraq into resuming Kurdish oil shipments, threatening with possible sanctions should Baghdad fail to act.
Even with years of U.S. sanctions, Iran’s oil exports generated an estimated $53 billion in 2023 and $54 billion in 2022, primarily through exports to China, the U.S. Energy Information Administration said. Iran relies on oil income from China, much like Russia, which also has Western sanctions and is dependent on sales to China and India.
Fears About Environmental Threats
Finland and the rest of the Nordic states have expressed worries over the threat from oil tankers sailing close to their coasts, threatening environmental catastrophes in case of an oil spill.
Whereas European countries have talked about inspecting vessels carrying Russian oil that could have invalid insurance, nothing serious has been done. The same goes for ships transporting Iranian oil.
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Source: Reuters
