President Donald Trump must be overjoyed at the impact his sanctions on Iran are having more than a month before they even go into effect. They are crippling exports from the Islamic Republic, at minimal cost to the U.S. Unfortunately, they have yet to succeed in changing the regime's policies, and are pushing prices back up to levels not seen in more than four years.

Iran's exports have fallen by 870,000 barrels a day since April, the month before the U.S. pulled out of the Iran nuclear deal. September's sales look likely to be less than two million barrels a day for a second month running, based on preliminary tanker tracking data. The decline is much steeper than analysts had expected _ and exports are likely to fall even further in the five weeks before the curbs take effect.

Shipments to South Korea and France stopped in June, and flows to Japan have also halted. Purchases by Indian refiners may also cease completely, with no orders placed for November. Iran endured its longest gap in shipments to China in at least three years and has begun to store crude on tankers anchored close to its export terminals as buyers retreat.

In a second win for Trump, U.S. companies haven't had to revise their supply chains. It's America's frenemies who are bearing the burden: those troublesome allies in Europe and Asia are having to scramble to fill the holes left by dwindling Iranian supplies. Even China appears to have agreed not to lap up cheap Iranian crude _ although it remains unclear whether that will change as the Sino-U.S. relationship sours further.

Not only are the alternatives more costly than heavily discounted Iranian barrels, they also undermine the economics of refineries and petrochemical plants designed to process Iranian oil. Nowhere is this more apparent than in South Korea, where Iran's high-sulfur condensate, a light form of crude extracted from gas fields, was an important feedstock for the country's petrochemical industry. South Korea bought nearly 60 percent of Iran's total condensate exports in the 12 months through April. Since then it has had to rely on more distant sources such as Norway and the U.S.

And that gives Trump his third win. The sanctions are giving a boost to U.S. oil exports as Asian processors are being forced to look further afield for alternatives to Iranian supplies. U.S. crude oil exports exceeded 2.5 million barrels a day in the week to Sept. 21 for only the fourth time since President Barack Obama lifted limits on American exports in December 2015.

So, if you're sitting behind the Resolute desk in the Oval Office, what's not to like?

For a start, the sanctions have so far failed to deliver any change in Iranian policy _ their main purpose. The Middle East is no safer. The proxy wars in which Iran is backing one side, while U.S.-sponsored Arab countries support the other, show no sign of ending. The Islamic Republic's leaders aren't yet buckling under U.S. pressure, and the popular uprising longed-for by National Security Advisor John Bolton still seems a pipe dream.

In the meantime, the loss of nearly a million barrels a day and the prospect of more to follow, have done more than anything else to revive the possibility of $100 oil. Little wonder Trump has tweeted his frustration at an increasingly powerless OPEC. Most members of that group are already producing as much as they can. Even if they could squeeze out more barrels, doing so would only raise worries about diminishing the cushion of spare capacity to offset any future disruption to supply.

Oil at $100 a barrel would be bad news for drivers everywhere _ including those in the U.S. _ and the sanctions on Iran are making it increasingly likely. With the midterm elections looming, it's no surprise that the president is trying to deflect blame for outcome of his foreign policy onto foreign oil producers.

 

Julian Lee is an oil strategist for Bloomberg. Previously he worked as a senior analyst at the Centre for Global Energy Studies.