Iran Sanctions Kick in Monday

Iran's Supreme Leader Ayatollah Ali Khamenei

Iran's Supreme Leader Ayatollah Ali Khamenei

USA sanctions on Iran were fully restored Monday, opening a new phase of conflict between the two countries since Washington withdrew from the 2015 nuclear deal earlier this year.

Thousands of Iranians rallied in Tehran on Sunday to mark the 39th anniversary of the U.S. Embassy takeover, as Washington restored all sanctions lifted under the nuclear deal.

In response, Iranian President Hassan Rohani told economists at a meeting broadcast on state television that Iran will break the sanctions and sell its oil despite the reimposed measures.

"I announce that we will proudly bypass your illegal, unjust sanctions because it's against global regulations", Rouhani said in a televised speech.

Traders said prices have been coming under pressure since it became clear that Washington was allowing several countries to continue importing crude from Iran despite the sanctions, which officially started on Monday.

"The impact will be severe, and we see it in the acute economic situation in Iran today", said Riad Kahwaji, founder and CEO of the Institute for Near East and Gulf Military Analysis in Dubai.

They were among those rumoured last week to receive exemptions from the United States to still trade with Iran on oil.

The US side was unmoved.

The Donald Trump administration's decision to issue waivers also marked a significant reduction from the Barack Obama administration, which issued such exemptions in 2012 to 20 countries over 3 years during last sanctions.

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He also said the reimposed US sanctions were part of a psychological war launched by Washington against Tehran, adding that "America's economic pressure on Iran is futile".

He said two would eventually stop imports and the other six greatly reduce them.

Secretary of State Mike Pompeo said the sanctions are "aimed at fundamentally altering the behavior of the Islamic Republic of Iran".

He described the sanctions as the "strongest tool" the USA holds, before resorting to military means, to pressure the Iranian regime to adhere to its demands.

The other major oil producing countries are expected to ramp up production to try and compensate for Iran's anticipated decline in output.

In the capital city of Tehran, the rally was held at the venue of the former U.S. embassy, which is known by Iranians as the "Den of Espionage".

Exports to India concurrently dropped, according to Bloomberg, while China, Tehran's biggest oil buyer, has not cut purchases.

Turkey indicated that it was one of them and analysts believe that India, one of the world's largest importers, is also on the list, which will be published on Monday.

"They need a little bit more time to get to zero", Pompeo explained. "Saudi Arabia can produce 12 million barrels a day, but only if it invests", said Hancock, noting that the country now produces just under 11 million barrels a day.

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