By Troy Tanzy
Co-authored by Daniel Rangel
Companies in the United States are beginning to scale down their business with Iran as sanctions begin to tighten for the second-richest country in the Middle East.
The Trump administration announced in May that it was leaving the Iran nuclear accord, a deal set up to sanction and minimize Iran's nuclear program in exchange for a seat in the world economy. President Trump observed that the deal was not strict enough in deterring Iran from its nuclear program. Since the United States pulled out of the deal, however, Iran's supreme leader ordered preparations to increase uranium enrichment, according to CNN.
The Iran nuclear accord was initially set up in 2016. Soon after its ratification, companies based in the United States sought to profit from Iran's energy sector. Iran has the second-largest natural gas reserve base and fourth-largest crude oil reserves in the world, making it an attractive market for companies who support or operate in the energy industry. Companies such as General Electric Co. (NYSE:GE), Chubb Ltd. (NYSE:CB), and Honeywell International Inc. (NYSE:HON), and at least a dozen others, all did business in Iran either directly or through foreign subsidiaries.
The companies were required to obtain a special license to operate in Iran, and U.S. companies booked over $175 million in revenues from business in Iran, according to The Wall Street Journal. The following chart from The Wall Street Journal shows the five companies that generated the most revenue from Iran since the Iran nuclear accord was instated in 2016.
While not explicitly stated by the Trump administration, companies can expect an end to the license that enabled them to do business in Iran. Until the United States can determine the best step forward in dealing with Iran's nuclear affairs, companies will have to sideline their prospective Iranian energy prosperities.
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