U.S. imposed sanctions on Iran’s oil industry will “cripple” the Middle Eastern country’s economy after they take effect in early November, according to a new report released Wednesday.
Analysts with Oxford Economics say they expect the sanctions to send Iran’s economy into recession, predicting it will contract by 3.7 percent next year, “the worst performance in six years.”
The economic sanctions were originally lifted by the Iran nuclear deal negotiated in 2015 during President Barack Obama's administration. President Donald Trump withdrew from the pact in May, calling it inadequate and claiming it would not prevent Iran from making nuclear weapons. He then followed up earlier this month with his decision to reimpose economic sanctions on Iran.
"As we continue applying maximum economic pressure on the Iranian regime, I remain open to reaching a more comprehensive deal that addresses the full range of the regime’s malign activities, including its ballistic missile program and its support for terrorism," Trump said in announcing his actions.
The sanctions specifically targeting Iran’s oil industry take effect Nov. 4. Oil and crude exports form the backbone of Iran’s economy and represents the primary source of revenue and foreign currency for the government.
Authors of the Oxford Economics report said it's unlikely any efforts by other world powers can help Iran find a way to export oil.
“It now looks like the impact will be worse than we initially thought as the other signatories to the original deal have yet to spell out a clear strategy that would allow them to circumvent U.S. sanctions and continue importing Iranian oil,” wrote the report’s co-authors Mohamed Bardastani and Maya Senussi, who are senior economists with Oxford Economics.
“While deteriorating economic conditions will be painful for most Iranians, a real domestic political challenge to the current regime and a genuine change in its foreign policy (one of the main objectives of re-instating US sanctions) are nevertheless unlikely as both reformers and conservatives are united in defying the sanctions,” they added.
On Tuesday, Iranian President Hassan Rouhani failed to convince parliament that his plans will pull the country out of an economic nosedive worsened by America’s withdrawal from the nuclear deal, further isolating his relatively moderate administration amid nationwide anger.
For only the second time in its history, parliament ordered a sitting president to appear before it to answer questions, the last time coming amid widespread discontent in 2011 over Western sanctions during the government of hard-line President Mahmoud Ahmadinejad.
While Rouhani warned that “painting a bleak picture of people’s lives will lead to further darkness,” lawmakers voted four separate times to say they were unconvinced of his answers about Iran’s recession, its cratering currency, unemployment and smuggling. Those questions now could go to Iran’s judiciary for further review, serving as a warning to the cleric his political stature is slipping.
“We have made mistakes,” Rouhani acknowledged at one point.