There are so many ways in which Iran can push back regarding the US sanctions imposed that could impact their economy, but here is the latest. The most recent move by the Islamic Republic is to dial up enrichment of uranium to 4.5% which slightly above the agreed level but well below the 20% level that puts it in a full weapons building – the 3.67% was the internationally agreed level. The IAEA, the International Atomic Energy Commission was supposed to check these levels, as this European institution is tasked with the job of monitoring allowed levels to ensure that 3.67% remains.
Iran is now suffering from the weight of sanctions, high inflation of 40% and the inability to sell its crude oil on the open market as the US has requested eight countries that were buying said oil to stop – some countries are of course ignoring the US. Iran said, according to ABC News, “The moment you stop sanctions and bullying, we are ready to negotiate.” The US has escalated regional tensions recently.
Our Views: If the US sources little of its energy needs from the Middle East, but has been active in the region for political reasons. Working with the Saudis, UAE and other members of a US alliance does two things 1. it prevents Iran from moving onto the peninsula and harming Saudi Arabia and 2. ensures that oil in the region finds its way to global markets. The US, China, Japan and other countries in the Far East might be discussing ways to work together as a war in the Strait of Hormuz would damage the global economy. China, Japan South Korea and India all need oil flow from the Strait of Hormuz, as a disruption would cause economic damage.
