Assessing the short- and long-term consequences of the US withdrawal from the Joint Comprehensive Plan of Action (JCPOA) for Iranian energy is crucial. In the short term, the impact will be rather modest in terms of oil exports. Iran may even stand to benefit from higher revenues, as seen in how crude prices have surged in past weeks on the back of geopolitical tensions. Nonetheless, in the long term, the US withdrawal will substantially muddy the outlook for Iranian energy.
On May 8, US President Donald Trump announced that the United States will be “instituting the highest level of economic sanction” and signed a memorandum to “begin reinstating” nuclear-related penalties against Iran. Meanwhile, the US Treasury Department’s Office of Foreign Assets Control (OFAC) noted that importers of Iranian oil will be given a 180-day wind-down period. By then, they would need to “significantly” reduce their purchases from Tehran should they wish to continue importing Iranian oil under an OFAC license afterward.
