Donald Trump's Iran Policy

The story is notable for what it says and for where it appears. The New York Times is reporting a Trump administration foreign policy success. The issue is Trump's withdrawal from the Iran Nuclear Deal.

The experts had been saying that Trump’s withdrawal and his reintroduction of sanctions against Iran would cause oil prices to rise and would damage the American economy. And the experts also suggested that international corporations would continue to do business with Iran… leaving it with the foreign currency to restart its nuclear program.

On this,the experts have been wrong. Clifford Krauss reports:

When President Trump announced in May that he was going to withdraw the United States from the nuclear agreement that the Obama administration and five other countries negotiated with Iran in 2015 and reimpose sanctions on the country, the decision was fraught with potential disaster.

If Mr. Trump’s approach worked too well, oil prices would spike and hurt the American economy. If it failed, international companies would continue trading with Iran, leaving the Islamic Republic unscathed, defiant and free to restart its nuclear program.

But the policy has been effective without either of those nasty consequences, at least so far.

Now that you know the expert predictions, Krauss explains what really happened:

Nearly two months before American oil sanctions go into effect, Iran’s crude exports are plummeting. International oil companies, including those from countries that are still committed to the nuclear agreement, are bailing out of deals with Tehran.

And remarkably, the price of oil in the United States has risen only modestly while gasoline prices have essentially remained flat. The current global oil price hovers around $80 a barrel, $60 below the highs of a decade ago.

“The president is doing the opposite of what the experts said, and it seems to be working out,” said Michael Lynch, president of Strategic Energy and Economic Research, a research and consulting firm.

Worse yet, the new policy has made things much worse for Iran.

For Iran, the timing could not be worse. The country has lost influence over oil prices as other producers have eclipsed its energy industry, which has not kept up with technological advances.

At the beginning of the century, Iranian officials could shake the oil markets by staging military maneuvers or merely hinting that they would reduce supplies. Back then, American oil production was falling and global demand for crude was surging.

But those days are long gone. Like the United States, countries including Canada and Brazil are also exporting more oil. Russia, Saudi Arabia and Iraq have also increased production, helping to keep oil prices in check. Saudi Arabia and its Persian Gulf allies are only too happy to support the sanctions against their chief rival, Iran, by expanding exports.

And, as you know, more and more companies, especially in Europe, are walking away from their deals with Iran. Most recently, Volkswagon pulled out of a deal with Iran. Apparently, this came about because of ambassador Richard Grennell’s negotiation skills:

“For Iran, it shows the leverage that they have had through oil has not only diminished but may never return,” said Amy Myers Jaffe, a senior fellow specializing in energy at the Council on Foreign Relations. “People just don’t care if they are going to lose business in Iran. People don’t feel desperate for supply.’’

So far, so good.