However, eight countries will be able to continue importing Iranian oil at lower levels in order to avoid upsetting global crude markets when the sanctions take effect on Monday, the US later said.
The sanctions come six months after President Donald Trump withdrew from the 2015 nuclear deal struck between world powers and Iran.
At the time, he began reimposing sanctions that had been suspended or removed by his predecessor Barack Obama.
That process will be completed starting from midnight Sunday, US eastern time, when sanctions on the regime’s banks, shippers, shipbuilders and oil sector are imposed.
The impact remains in question as other countries, particularly Washington’s European allies, resist joining its effort to economically strangle the Tehran regime.
The European Union has gone so far as to protect businesses that operate in Iran. It has announced plans for a legal framework through which firms can skirt US sanctions, although few major corporations have been eager to risk the wrath of penalties in the world’s largest economy.
“This is not 2012 when the world was united behind sanctions against Iran. This is the Trump administration trying to force the rest of the world to go along with a policy that most countries do not accept,” said Barbara Slavin, an Iran expert at the Washington-based Atlantic Council.
“The US has had some success in terms of frightening away major corporations. The sanctions hurt a lot. But Iran is still going to be able to sell oil,” especially to China, she said.
OIL TRADE EXEMPTIONS
Pompeo said the US will grant exemptions to eight countries that have pledged to or have already cut back on purchases of petroleum from Iran, which has long depended on crude exports to power its economy.
He did not name the eight countries, but they are believed to include India, Japan, South Korea, and possibly China.
Pompeo said the countries agreed that the payments for the oil will go into offshore accounts that Iran will only be able to tap for “humanitarian trade, or bilateral trade in non-sanctioned goods and services.”
“Maximum pressure means maximum pressure,” he said.
To punish Iranian banks, US Treasury Secretary Steve Mnuchin said the global financial network SWIFT — which enables secure bank-to-bank communications and transactions — will also be subject to US sanctions if it provides services to Iranian financial institutions on the US blacklist, which includes most major Iranian banks.
That could make it very hard for Iran to do business with other countries.
“SWIFT is no different than any other entity,” Mnuchin said.
US OBJECTIVE IN QUESTION
Justifying the action, Pompeo has issued a list of demands for Iran that go well beyond the nuclear program that was the focus of Obama’s deal.
He wants the Shiite clerical regime to withdraw from war-ravaged Syria, where it is a critical ally of President Bashar al-Assad, and to end longstanding support to regional militant movements Hezbollah and Hamas.
The US also wants Iran to stop backing Yemen’s Huthi rebels, who are facing a US-supported air campaign led by Saudi Arabia.
But experts don’t expect Iran’s leaders to immediately throw in the towel.
“It’s basically magical thinking. The Iranians have been able to continue their support to regional proxies and allies for 40 years despite economic pressure,” said Ali Vaez of the International Crisis Group.
He said the Trump administration believed that a constrained, struggling Iran would see its influence erode. But the final goal, he said, was unclear.
“I think the endgame depends on who you’re asking. The president himself is interested in having a broader, better deal with the Iranians, but I believe that most of his national security team are interested in either destabilising Iran or assuring a regime change in Tehran,” Mr Vaez said.
The aim is to cripple the Iranian economy to pressure Tehran to halt its nuclear activities and what the US says is broad support for 'terrorism' in the region.