China and Turkey say they will keep importing oil from Iran in defiance of president Donald Trump who on Monday announced an end to waivers that allowed them to do so. Iran then renewed its long-standing threat to close the Strait of Hormuz by military force.

The sharp escalation in geopolitical tensions, and the opening of a new and more dangerous flashpoint in the Middle East, is a result of the Trump administration’s avowed aim to reduce Iran’s oil exports to zero.

The goal of this tactic is to force Iran to negotiate a new deal to replace the 2015 Joint Comprehensive Plan of Action (JCPOA), or the Iran nuclear deal, which Trump unilaterally abrogated in May 2018.

Trump’s withdrawal from the JCPOA also restored wide-ranging sanctions on the Iranian economy in November. His administration, however, also granted six-month waivers, or Significant Reduction Exceptions (SREs), to eight countries (China and Turkey included) that allowed them to continue importing limited quantities of crude oil from Iran.

Chinese and Turkish companies now face the threat of being locked out of the U.S. financial system if they continue to import crude from Iran.

China’s Ministry of Foreign Affairs on Monday blasted Trump’s Iran policy.

“China opposes the unilateral sanctions and so-called ‘long-arm jurisdictions’ imposed by the U.S.,” said Foreign Ministry spokesperson Geng Shuang. “Our cooperation with Iran is open, transparent, lawful and legitimate, thus it should be respected.”

Shuang said China “is committed to upholding the legitimate rights and interests of Chinese companies and will play a positive and constructive role in upholding the stability of global energy market.”

Turkey’s Minister of Foreign Affairs Mevlut Cavusoglu rejected Trump’s sanctions outright, saying it “will not serve regional peace and stability” and will hurt the Iranian people.

As might be expected, the strongest vilification of Trump’s attempt to strangle its oil exports came from Iran. The Islamic republic has long threatened to shut down the Strait of Hormuz, the world’s busiest transit lane for seaborne oil shipments, if it’s prevented from exporting oil and it renewed the same threat Monday.

“According to international law, the Strait of Hormuz is a marine passageway and if we are barred from using it, we will shut it down,” said Rear Admiral Alireza Tangsiri, commander of the Islamic Revolution Guards Corps’ Navy.

“In case of any threat, we will have not even an iota of doubt to protect and defend the Iranian waters.”

Earlier this month, the Trump administration designated the Islamic Revolutionary Guard Corps a terrorist organization. This is the first time the U.S. has applied the designation to a foreign country’s military.

Oil prices jumped to nearly six-month highs yesterday on the news. The oil market widely expected Washington to extend the waivers for five of the countries.

Ibrahim Kalin turkey
Ibrahim Kalin, the spokesman for Turkish President Recep Tayyip Erdogan, speaks to reporters during a roundtable at the Turkish embassy in Washington, DC on April 16, 2019. - Kalin voiced hope that the United States would extend a waiver for Turkey on sanctions against buying oil from Iran. SHAUN TANDON/AFP/Getty Images

The U.S. decision to stop issuing sanctions waivers will remove about 1 million barrels per day of Iranian oil from the market at a time when oil supply is already tightening and prices rising. Crude futures soared to nearly six-month highs on news of the end to the sanctions waivers.

“This decision is intended to bring Iran’s oil exports to zero denying the regime its principal source of revenue,” said the White House.

Secretary of State Mike Pompeo said the U.S. is going to force Iran’s oil exports to hit zero. “How long we remain there, at zero, depends solely on the Islamic Republic of Iran’s senior leaders. We’ve made our demands very clear to the ayatollah and his cronies.”

The U.S. has given Iran a list of 12 demands Iran must meet before the U.S. lifts sanctions. The list demands Iran accept new limits on its nuclear program, end ballistic missile tests, end its support for U.S.-designated terror groups and free U.S. citizens held in detention.