US imposes highest level of sanctions on Tehran - Rabobank

Analysts at Rabobank note that the US President Trump has unilaterally withdrawn from the Iran nuclear deal and will be reinstituting the highest level of sanctions on Tehran.

Key Quotes

“The US Treasury has underlined that US sanctions on Iran's oil sector, aircraft exports to it, precious metals trade, and Iranian government access to USDs would begin again after 90- and 180-day wind-down periods. Moreover, any nation aiding Iran will also be sanctioned: “Those who fail to wind down such activities with Iran by the end of the period will risk severe consequences.”

“Trump did not state that this action was taken due to Iranian non-compliance with the deal’s terms, but due to the weakness of the deal’s structure, and in response to Iranian ballistic missile development, sponsorship of terrorism, and regional aggression. The only thing hawkish missing from the US statement was the explicit, rather than implicit, threat of military action should Iran move to restart uranium enrichment (which, as the deal’s critics pointed out, it can now do much faster given it has been allowed to continue refining the technology anyway).”

“The immediate regional reaction has seen Israel call up some up of its military reserves, open public bomb shelters in the north of the country, and place itself on the highest state of alert following what it claimed were unusual Iranian troop movements in Syria; moreover, it has allegedly carried out another air-strike outside Damascus, with some suggestions that might have targeted Iranian missile activity. However, both its government and that have Saudi Arabia welcomed the US decision.”

“The balance of world reaction has been negative. The EU's top diplomat Mogherini stated: “The EU is determined to act in accordance with its security interests and to protect its economic investments." However, as Trump has been making very clear to those who are listening, those two are not necessarily one and the same thing anymore. Certainly, this issue conflates with the looming 1 June deadline for the EU to also accede to US trade demands on steel and aluminium, and to support it on trade vs. China, or to suffer the consequences.”