Donald Trump
The United States is all set to reimpose the stringent sanctions it placed on Iran before the 2015 agreement and is considering new penalties, according to the US media.
The US move comes after President Donald Trump junked the landmark nuclear deal with Iran.
On Tuesday, Trump had argued that the deal struck by the previous Obama administration and world powers was "defective at its core" and that he would pull out and reimpose sanctions on Iran, the world's fifth-biggest oil producer.
According to The New York Times, the US will now reinstate all the sanctions it had waived as part of the nuclear accord, and it will impose additional economic penalties that are now being drawn up by the Treasury Department.
On Tuesday, US Treasury Secretary Steven Mnuchin had declined to specify what additional sanctions the Trump administration might impose on Iran, but he expressed confidence that they would still be powerful even if other American allies did not follow suit.
"We do not want to let Iran use the US financial markets and financial system and transact in dollars until they agree that not only will they not have a nuclear weapon now, but we've put in provisions that they will never have one," Mnuchin said.
He said the sanctions would target industries mentioned in the deal, including Iran's oil sector, aircraft manufacturers exporting to Iran and Iranian government attempts to buy US dollar banknotes.
Under the financial sanctions, European companies will have 90 to 180 days to wind down their operations in Iran, or they will run afoul of the American banking system. The sanctions on oil will require European and Asian countries to reduce their imports from Iran, the paper said.
Mnuchin also insisted that the restrictions would not drive up oil prices because other suppliers would pick up the slack.
"My expectation is not that oil prices go higher," he said. "To a certain extent, some of this was already in the market on oil prices," he added.
Iran ramped up its oil production by one million barrels per day after sanctions were lifted in early 2016.
At least some of that oil will now be pulled from the market — at a time when oil prices are already rising because of production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and Russia as well as instability in Venezuela, CNN Money reported.
Iran produced about 3.8 million barrels of oil per day in April, according to the latest S&P Global Platts OPEC survey.
The Washington Post said that Trump gave little indication of what happens now.
"He proposed no new strategy. He offered no ideas for how to achieve what he called "a real, comprehensive and lasting solution to the Iranian nuclear threat," it noted.
To many of president Trump's critics, including some in both parties and the European leaders who spent the past several months trying to address his concerns, there is no Plan B, it said.
Trump's interpretation of US strategic interests has also led to withdrawal from major international climate and trade accords, the paper said, noting that many have expressed concern about the lack of a visible plan.
In the past, Trump has sometimes said that the Europeans cared only about making money in Iran. In their many conversations with Trump about Iran this year, the Europeans asked him to avoid damaging their own investments there, even if he decided that the United States was out of the deal, the Post reported.
Major European and US companies are likely to be hit. Some exemptions are due to be negotiated but it is not yet clear what, the BBC reported.
US National Security Adviser John Bolton is reported as saying that European companies doing business in Iran will have to stop doing so within six months or face US sanctions.
The Trump administration made it clear that there would be no exceptions to its reinstatement of sanctions that had been lifted as part of the 2015 nuclear agreement signed between Iran and and the five permanent members of the UN Security Council - the US, UK, France, China and Russia - plus Germany.
(With PTI inputs)
