US vows pain to companies found evading renewed Iran sanctions

The US gave a stark warning to companies around the world: Evading sanctions on Iran will hurt.

“I promise you that doing business in Iran in defiance of our sanctions will ultimately be a much more painful business decision than pulling out of Iran,” Secretary of State Michael Pompeo said on Monday at a news conference in Washington, after the US imposed penalties on 700 individuals, banks, ships, aircraft and companies tied to Iran’s energy and financial industries. Vowing “swift, severe penalties” to those caught violating sanctions, Pompeo said the US pressure’s campaign has cost Iran $2.5bn in oil revenue since May. But oil traded close to a sixmonth low as Pompeo’s tough talk was softened by his announcement of temporary waivers from penalties for eight governments.

Facing criticism from some US conservatives who didn’t think he should issue any waivers, President Donald Trump said on Monday that he didn’t want to shock energy markets by forcing all buyers to halt Iranian oil purchases.

“We want to go a little bit slower because I don’t want to drive the oil prices in the world up,” Trump told reporters on Monday in Washington. “It would cause a shock to the market.” Trump is trying to force Iran to give up its nuclear ambitions and what he calls its support for terrorism in the Middle East by choking off its oil revenue. The move came after he abandoned the deal that the US and five other world powers reached in 2015 to ease sanctions in return for curbs on Iran’s nuclear programme. Pompeo confirmed that the eight governments granted waivers from oil sanctions are China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey. He said the waivers were only temporary measures to ease their transition from Iranian crude and avoid destabilising the energy market. But some Republicans in Congress have vowed legislation to eliminate the waivers, and Iran’s President Hassan Rouhani ridiculed them on Monday.

“That the US is forced to exempt eight nations from sanctions on oil sales when it had previously said it wants to cut Iran’s oil sales to zero, isn’t that a sign of Iran’s victory and the US backing off?” Rouhani said.

Pompeo said more than 100 companies have already withdrawn from the Iranian market since May, and the US has shown in the past its willingness to heavily fine violators of American sanctions. French bank BNP Paribas SA agreed to pay $8.9bn in July 2014 for violating US sanctions against Sudan, Cuba and Iran. Germany’s Commerzbank AG agreed to pay $1.45bn for moving funds through the US financial system for Sudan and Iran.

The waivers announced on Monday largely confirmed expectations in the energy market and eased concerns about the prospects of a tight global market at the end of the year.