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Trump Seeks New Iran Sanctions as Pompeo Consults Saudi Arabia

Nick Wadhams, Glen Carey and Josh Wingrove
Trump Seeks New Iran Sanctions as Pompeo Consults Saudi Arabia

(Bloomberg) -- President Donald Trump said he wants tougher U.S. sanctions on Iran as his top diplomat arrived in Saudi Arabia to consult with leaders and build a case against Tehran following weekend attacks on the kingdom’s key oil facilities.

“We’ll be adding some very significant sanctions,” Trump said Wednesday in Los Angeles, adding that the administration will be announcing them over the next 48 hours.

Trump announced the plan to impose more sanctions earlier Wednesday by tweet, just hours before Secretary of State Michael Pompeo landed in Jeddah, Saudi Arabia. Pompeo told reporters that the U.S. believes with “high confidence” that Iran was behind the strikes on Saudi Aramco facilities, regardless of whether they originated in Iranian territory. The attack was initially claimed by Houthi rebels in Yemen.

“It’s not the case that you can subcontract out the devastation of 5% of the world’s oil supply,” Pompeo told reporters. He said his goal during the trip to Saudi Arabia and United Arab Emirates is to “build out a coalition to develop a plan to deter” Iran.

Trump on Wednesday signaled reluctance to engage in a military operation that could lead to a prolonged conflict.

“It’s very easy to attack,” he said, but added: “How did going into Iraq work out?”

But the president also warned that he has “plenty of time to do some dastardly things” to Iran in response to the strikes on the Aramco facilities.

‘Unquestionably’ Iran

Earlier in the day, Saudi Arabia’s defense ministry said the attacks were “unquestionably sponsored by Iran,” adding that an assessment of the parts of drones and missiles recovered indicate Iranian origin. The ministry displayed pieces of what it said was the weaponry involved.

“We were blessed that there were no Americans killed in this attack, but any time you have an act of war of this nature there’s always a risk that could happen,” Pompeo said in Jeddah.

Iran has denied involvement in the attacks, which were claimed by the Yemeni rebels allied with the Islamic Republic. Saudi defense officials, however, said the strikes came from the north, though they didn’t directly say they originated on Iranian territory, a nuance echoed by Pompeo.

West Texas Intermediate crude for October delivery declined 76 cents to $58.58 a barrel at 11:08 a.m. on the New York Mercantile Exchange.

Trump has been ramping up sanctions on the Islamic Republic since quitting the 2015 nuclear deal with Iran, including adding severe restrictions on the country’s oil sales. Additional U.S. economic sanctions could be a route to avoiding direct military conflict. While Trump initially said the U.S. is “locked and loaded” to respond to the Aramco attack, he has since signaled that he isn’t eager for another Middle East conflict.

Sanctions Targets

Iran’s economy has already been under severe pressure from existing sanctions, yet some analysts said there are still a number of potential targets for restrictions, including in the construction sector, additional companies on the Tehran stock exchange and foundations controlled by the regime or Iranian Revolutionary Guard Corps. But with the vast majority of Iran’s economy dependent on oil sales, additional sanctions may have little more than a marginal impact.

Soon after the strikes took place, Pompeo quickly blamed Tehran. The attacks crippled oil output from the world’s biggest exporter, but the international response has so far been more measured. The United Nations said it is sending a team of inspectors to investigate the incident.

Hardliners on U.S. policy toward Iran warned the president that a sanctions-only approach may embolden the regime, especially after a spate of tanker attacks in the Persian Gulf and the shooting down of an American drone over the region’s waters earlier this year.

“U.S. presidents who are unwilling to use all instruments of national power always default to sanctions,” said Mark Dubowitz, the chief executive of the Foundation for Defense of Democracies and a prime architect of U.S. sanctions against Iran. “While the administration can cause even more severe pain economically for the regime, Tehran will interpret this as a sign of American weakness, not strength.”

Trump rebuked an ally, Republican Senator Lindsey Graham of South Carolina, on Twitter on Tuesday after Graham suggested that Iran interpreted Trump’s reluctance to retaliate earlier this year for the downing of a U.S. drone as weakness.

The strikes on Saudi Arabia have diminished expectations that Trump and Iranian President Hassan Rouhani could meet on the sidelines of the UN General Assembly next week in New York.

U.S. defense officials have said they are preparing an assessment, which could be made public soon, on who was responsible for the attacks. U.S. experts are conducting an intense examination of evidence on the ground in Saudi Arabia and reviewing intelligence such as radar tracks from the region, according to the first official.

(Updates with Trump comments beginning in second paragraph)

--With assistance from Tony Capaccio and David Wainer.

To contact the reporters on this story: Nick Wadhams in Washington at nwadhams@bloomberg.net;Glen Carey in Jeddah, Saudi Arabia at gcarey8@bloomberg.net;Josh Wingrove in Washington at jwingrove4@bloomberg.net

To contact the editors responsible for this story: Bill Faries at wfaries@bloomberg.net, ;Alex Wayne at awayne3@bloomberg.net, Joshua Gallu

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