President Donald Trump’s decision to reimpose sanctions on Iran threatens to tighten global oil markets and could derail tens of billions of dollars in business deals.
But the “snap-back” of penalties on Iran isn’t immediate, instead kicking in over six months. That could allow time to negotiate a new accord to replace or supplement the deal agreed to during Barack Obama’s presidency.
Trump’s order on Tuesday blocks new contracts immediately and sets 90- and 180-day clocks for companies with existing Iranian business commitments. By August or November, they’ll have to comply with a broad array of sanctions targeting the Iranian Central Bank and Iran’s financial sector, oil industry, shipping and other economic pressure points.
Trump made clear he expects to achieve a new deal that lifts the penalties.
“The fact is they are going to want to make a new and lasting deal, one that benefits all of Iran and the Iranian people, ” Trump said. “When they do, I am ready, willing and able.”
Unless Trump is satisfied or changes course, here is what will happen:
August Sanctions
The first deadline is Aug. 6. By then, companies must wind down holdings of Iranian sovereign debt or Iranian currency. Any person or company that assists the Iranian government with acquiring or purchasing U.S. dollar banknotes also will be subject to sanctions by that date.
Sanctions also snap back into place Aug. 6 on Iran’s trade in gold and other precious metals, graphite and coal, metals such as aluminum and steel, the country’s automobile sector and luxury products such as Iranian-origin carpets and caviar.
Treasury Secretary Steven Mnuchin said in a briefing that companies can request waivers or special licenses to avoid sanctions, and they’ll be determined on a case-by-case basis.
November Sanctions
Sanctions targeting companies doing business with Iran’s oil industry are reinstated Nov. 4, including penalties against foreign financial institutions that conduct significant transactions with the Central Bank of Iran.