It was announced Thursday that the U.S. will grant China an exception from the newest sanctions set to take effect on July 1 that restrict foreign entities from importing Iranian crude oil. China is Iran’s top buyer, and the Obama administration has now granted exemptions to every major buyer of Iranian crude.
While this bodes well for Iran, the price of oil is dropping, which will make this latest development only bittersweet. Prices are falling due to decreased demand and Saudi oil rigs pumping in overdrive. However, Iran has always been creative with working around such issues.
Iran needs oil prices to stay high to offset the effects of sanctions on its revenue stream. If a Saudi oil rig just happens to blow up, or pipelines in southern Iraq are attacked, it might make sense to point the first finger at Iran. The regime is too smart to use its own assets to do such a thing and would likely outsource the work. This may sound like a crazy idea, but in theory it could help bring prices back up a bit, and Iran has been known to try out operations much crazier than this.
For some reason, the U.S. is getting a little bit softer on Iran. One explanation could be the fact that the Obama administration realizes that it needs to get creative in dealing with Iran to avoid an Israeli strike or other kinetic conflict. Although sanctions cannot be officially dropped until Iran is willing to respond in kind with nuclear transparency –not to mention the political firestorm the U.S. administration would suffer for it- it is possible that this is just a creative way to show some leniency towards Iran in a backhanded gesture of good faith. This could be a talking point during the next round of negotiations.
Regardless, Iran’s oil export revenues are not what they once were and probably won’t be for the foreseeable future. But the timeline of their implementation has provided Iran ample opportunity to try and find alternate markets and reform its social spending to adapt to the changes. As the U.S. continues to get soft, Iran will slowly regain momentum.
In essence, the entirety of the debacle over the nuclear issue, the haphazard sanctions program, and general diplomatic bumbling prove one thing: nobody in a position of power, right or left, red or blue, has the slightest idea of what to do with Iran. Unfortunately, the ones who champion ideas that just may work to make some real progress too often fall on deaf - or inept - ears.