Tuesday, May 22, 2018
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Obama signs off new Iran oil sanctions

US President Barack Obama is moving ahead with new sanctions aimed at squeezing Iran's oil exports after determining there is enough crude on world markets to take the step without harming Washington's allies.

Obama's move, announced on Friday, allows the US to go forward with sanctions on foreign banks that continue to purchase oil from Iran.

The measures aim to further isolate Iran's central bank, which processes nearly all of the country's oil purchases, from the global economy.

US officials hope ratcheting up economic pressure will both push Iran to abandon its controversial nuclear programme and convince Israel to give sanctions time to take hold before pursuing a threatened military strike on Iran's nuclear facilities.

The US and allies believe that Iran is attempting to develop nuclear weapons. Tehran says its nuclear programme is for peaceful purposes.

Spare oil capacity

Under a sweeping defence bill Obama signed at the end of December, the president had until Friday to determine if there was enough oil supply on the world market to allow countries to cut their oil purchases from Iran.

The president said he based his determination on global economic conditions, the level of spare oil capacity and increased production by some countries, among other factors.

He said he would keep monitoring the global market closely to ensure it could handle a reduction of oil purchases from Iran.

With oil prices already rising this year amid rising tensionsbetween Iran and the West, US officials have sought assurances that pushing countries to stop buying from Iran would not cause a further spike in prices.

That is particularly important for Obama in an election year that has seen an increasing focus on gas prices.

The congressionally mandated sanctions target foreign financial institutions that do business with Iran's central bank, barring them from operating in the US to buy or sell Iranian oil.

US allies

The penalties are to take effect at the end of June, around the same time a European Union embargo on Iranian oil kicks in.

In order to provide flexibility to countries friendly to the US, the sanctions bill allows Washington to grant waivers to nations that significantly reduce their purchases of Iranian oil.

Domestic and foreign policy concerns have complicated the administration's decision to pursue the oil sanctions.

Many of the countries that buy oil from Iran are US allies, including several European Union nations, Japan, South Korea and India.

Even before Friday's decision, the state department announced that it would grant waivers to 10 EU countries and Japan because of steps they had already taken to cut back on Iranian oil.

The EU oil embargo, approved in January, is set to take effect in July.

'Nations on notice'

Senator Bob Menendez, a Democrat who co-authored the sanctions legislation with Republican Senator Mark Kirk, said he welcomed Obama's support in targeting Iran's central bank.

"Today, we put on notice all nations that continue to import petroleum or petroleum products from Iran that they have three months to significantly reduce those purchases or risk the imposition of severe sanctions on their financial institutions," Menendez said in a statement.

He predicted most countries would cut their purchase of oil from Iran, either out of fear of sanctions, or a shared fear over Iran's alleged pursuit of nuclear weaponry.

The US has not said what constitutes a significant reduction in Iranian oil purchases, and analysts believe the administration could use different metrics for different countries.

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