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Will the Situation in Iran affect Supply Chain?

It isn’t surprising to see on the news that Iran and the United States are bickering over many things. Just recently, the President of the United States, Donald Trump called off an airstrike on Iran 11 minutes before it started. The suspended airstrike was in response to the Iran government shooting down a drone belonging to the United States.  Since the Joint Comprehensive Plan of Action failed after the United States pulled out, Iran has been unsettled economically and otherwise.

History of Iran – US Situation

Iran has been leading headlines around the world every other day with fresh updates in its case with the United States. For two countries that once enjoyed a powerful alliance, Iran and the United States have been at loggerheads since 1995 when the US placed the first trade embargo on them. For a while in 2015, the clime was favorable for bridging the gap between the United States and Iran. With rumors of meetings held between representatives from both countries, Iran and the US seemed to be considering a truce.

In 2016, after Donald Trump became the President of the United States, the world received a clear and solid proof of a truce. That truce would be signed and known as the Joint Comprehensive Plan of Action. The Joint Comprehensive Plan of Action is an agreement made between Iran, the P5 + 1 and the EU. Under this agreement, Iran pledged to scale back on its nuclear activities as well as do away with its stock of nuclear products. The juicy part of the deal for Iran was that if they did cut back and produce a small percentage of uranium-rich materials, the other members would raise their sanctions. The world saw this as great news, for the United States, the EU and especially for Iran’s impoverished citizens. However, this peaceful moment didn’t last too long. It came to an end when the United States pulled out of the Joint Comprehensive Plan of Action in a bid to force Iran’s hand to stop supporting militants. Now the embargo on trade is back for Iran, and this does not bode well for the country and its impoverished citizens.

How This Affects Supply Chain

The supply chain is a broad term that covers all processes that involve the production and distribution of a product until it reaches an end-user. The current state of events in Iran with the replaced embargo is a spoke in the wheel of the supply chain in Iran. The blockade restricts the economic activities of Iran and other countries which could make trading difficult. Some goods and services won’t reach end users who live in certain countries such as the United States since Iranian airlines aren’t allowed on US soil. Manufacturers and distributors might have to settle for other roundabout mean to get their products to its end-user or forgo trading with individual countries. The supply chain in Iran would suffer under these austere situations unless the sanctions are removed or made less rigid.