LONDON: US President Donald Trump’s decision to reimpose sanctions on Iran is forcing global shipping companies, traders, insurers and banks to look at pulling the plug on business with Tehran, it emerged yesterday.
Swiss-headquartered private shipping group MSC said it would “comply with the (sanctions) timetable set out by the US government.”
Denmark’s Maersk Line said it had ceased acceptance of the specific cargoes blacklisted by the US Treasury this week.
On May 9, President Donald Trump broke with his European allies to announce US withdrawal from the international nuclear agreement with Tehran brokered by President Obama. Trump disclosed a phased reimposition of punitive sanctions, which will further damage an already weakened Iranian economy.
Among other things, Washington is imposing sanctions on the direct or indirect sale, supply, or transfer to or from Iran of graphite and raw or semi-finished metals such as aluminium and steel, and coal, Reuters reported. The US will separately re-impose sanctions on the provision of insurance and reinsurance.
Reuters cited sources at global trading companies predicting an imminent drop in Iranian exports due to banking issues, such as availability of trade finance.
A potential decline in oil volumes due to the sanctions could add to upward pressure on oil prices, which have gained almost 20 percent to around $78 per barrel since January.
The price rise has also been bolstered by a decision by OPEC and Russia to cap production to reduce inventories that had built up during the boom that came to a halt in 2014.
Middle Eastern oil-producing countries have benefited this year from rising oil revenues, giving them headroom to increase spending to stimulate economies that faced austerity in the wake of the collapse of the crude price four years ago.
Saudi Arabia’s first-quarter statement revealed increased government spending and a jump in central government receipts from new taxes, including VAT.