Monday, August 6 is D-Day for the first wave of reimposed US nuclear sanctions on Iran stemming from President Trump's National Security Presidential Memorandum (NSPM) signed on May 8 that withdrew the US from the Iran nuclear deal. The reinstated US nuclear sanctions on the Iranian regime are subject to certain 90-day and 180-day wind-down periods as per guidance from the US Treasury Department.
This first wave of sanctions go into effect following the 90-day wind-down period that concludes on August 6. The big impact on this date comes from sanctions on sales of airplane and airplane parts that were a key component of the deal for Iran and affects Boeing and Airbus in particular. Other sanctions will affect: pistachios and other food stuffs; Persian carpets; gold and precious metals; steel, aluminum and coal; and sovereign debt and other financial transactions.
Oil sanctions on Iran go into effect on November 5 after the 180-day wind-down period and include sanctions on Iranian ports and shipping sector; petroleum-related transactions and the purchase of petroleum, petroleum products or petrochemical products; transactions by foreign financial institutions with the Central Bank of Iran; underwriting services, insurance or reinsurance; and on Iran’s energy sector.
For a complete list of all sanctions for both the August 6 and November 5 implementation dates, see the June 27 updated US Treasury Department guidance here.
Trump said on May 8 that the US would impose the “highest level of economic sanctions” on Iran adding that “any nation that assists Iran will also be subject to sanctions.”
To date, Trump has 1) decertified the Iran deal last October; 2) reinstated oil sanctions in May; and 3) informed other countries that there will be “zero waivers” from US sanctions in July. Now we can add implementation of the first wave of sanctions on August 6 to the list of actions taken.
Still, many market watchers and analysts continue to doubt Trump’s consistent Iran policy despite clear evidence to the contrary. The theory behind why some market watchers continue to second-guess Trump’s tough implementation of US oil sanctions is that it is or will cause higher gasoline prices before the US midterm congressional elections.
While we agree the politicians pay close attention to gasoline prices, we don’t see it changing the Iran policy. First, we think gasoline prices in the US will retreat after Labor Day after the high demand summer season and will relieve some of this political pressure.
Second, Trump views high oil prices as Saudi Arabia’s problem -- in exchange for his tough action on Iran. In the administration’s view, if other countries say they need the oil, the White House tells them to call Saudi Arabia.
Indeed, the White House and the Saudi government have been in close coordination on trying to moderate high prices through increased production. OPEC’s decision, led by Saudi Arabia and the UAE, in June to increase production was largely in response to pressure from Trump.
Early reports this week from Bloomberg and Platts indicate that Saudi Arabia, UAE and Kuwait have increased production collectively by 850,000 barrels per day since oil prices spiked to $80 in May. These Gulf producers, who support tough US action on Iran, seem determined to keep oil prices in check at least through the US midterm congressional election on November 6 - the same day Iran oil sanctions go into effect.
