The anticipated shift in U.S. foreign policy under Trump could lead to increased tensions in the Middle East, particularly with Iran, as sanctions are seen as a double-edged sword that may provoke further instability.
The rise in Iranian oil exports during Biden's presidency highlights the challenges of enforcing sanctions in a globalized economy, where countries like China continue to engage with Iran despite U.S. pressure.
If sanctions are reimposed, Iran may respond by further strengthening its oil export networks and seeking alternative markets, potentially leading to a more complex geopolitical landscape.
The effectiveness of renewed sanctions will depend on international cooperation and the willingness of other nations to align with U.S. policies, which may not be guaranteed.
The Economist has reported that with Donald Trump returning to the White House as President-elect, there may be a renewed push for 'maximum pressure' on Iran through sanctions aimed at achieving a stricter nuclear agreement. This approach follows a previous term where sanctions did not fully succeed in curbing Iran's nuclear ambitions. Under Joe Biden's administration, while some sanctions remained, enforcement has lagged, allowing Iranian oil exports to increase significantly, particularly to China, from less than 600,000 barrels per day in 2019 to 1.8 million barrels per day earlier this year.
Analysts suggest that if tougher sanctions are reimposed, they could potentially cut Iranian oil exports by up to 1 million barrels per day, significantly impacting Iran's economy, which is already facing a rising budget deficit. However, the International Energy Agency predicts an oil surplus in 2025, which may cushion the impact on U.S. gasoline prices.
Trump's incoming administration appears to favor a return to strict sanctions, with key figures like Marco Rubio and Mike Walz advocating for a robust pressure campaign against Iran. However, there are dissenting voices within the administration, such as former Congresswoman Tulsi Gabbard, who has recently opposed sanctions. Despite the push for sanctions, there is a growing consensus on the need for a new nuclear deal, as many believe a return to the original Joint Comprehensive Plan of Action is not viable.
