The Trump administration’s unilateral fiat that it will end all waivers allowing nations like India, China, Japan and South Korea to continue importing crude from Iran is likely to push up oil prices and place at risk global economic recovery. If the US is aiming to bring Tehran to its knees or effect a regime change, that would prove to be difficult.
The last round of sanctions battered Iran but did not really lead to any calls for an end to the Hassan Rouhani regime. It also did not alter Iran’s stance towards its Arab neighbours. On the other hand, the gambit risks upsetting the international global economy that has been displaying signs of a slowdown.
The White House has spoken of discussions with Saudi Arabia and the UAE to ensure global oil supplies are not disrupted and prices remain stable. But analysts feel there would be a considerable impact and the House of Saud and US shale oil companies would benefit from higher crude prices. Most nations including India will try to talk the US out of this blunt move.
New Delhi would perhaps come up with a new face-saving waiver formula that severely reduces Iranian oil exports but still allows some leeway. However, none of the nations that had earlier been granted waivers have the wherewithal or the stomach to stand up to US economic and diplomatic pressures—except China. India and Indian companies are dependant on the US in more than one way. Sanctions would affect global sales, transfer of capital and even access to new technology.
For India, the end of Iranian oil imports not only means loss of a cheap source of quality crude from a nation with which it has had a long relationship, it also places at risk crucial joint projects such as the Chabahar port and the plan to build roads and railways to link up with Afghanistan and Central Asia through Iran. Not to mention India’s interests in the Afghan end-game where Iran could be a vital ally for the Indians as the Americans walk out of Kabul and the Pakistan-controlled Taliban exerts pressure on that landlocked nation’s elected government.