The Senate bill, passed unanimously yesterday, would give the president the power starting July 1 to bar foreign financial institutions that do business with IranÂ’s central bank from having correspondent bank accounts in the U.S. If enacted, it could be much harder for foreign companies to pay for oil imports from Iran, the worldÂ’s third-largest crude exporter. The Obama administration opposes the legislation. While EU remains divided over calls to halt purchases of Iranian oil, ministers meeting yesterday in Brussels added 180 Iranian officials and companies to their sanctions list and started work on measures against IranÂ’s oil exports, banks, transportation and the Revolutionary Guard Corps.
“The Central Bank of Iran has become a vital intermediary for purchasers of Iranian crude because existing sanctions against the Persian Gulf country have constrained Iran’s ability to access the international financial sector to settle oil trades,” said Mark Dubowitz, director of the Iran Energy Project at the Foundation for Defense of Democracies in Washington. Renewed international pressure over Iran’s nuclear ambitions risks igniting tensions in the Middle East that may threaten the flow of oil to the increasingly fragile world economy. Iran denies western allegations that its nuclear program is disguising weapons development.
U.K. Embassy Stormed
The moves by Europe and the U.S. to deepen IranÂ’s political and economic isolation came as furor continued over this weekÂ’s storming of the U.K. Embassy in Tehran. European officials said the attack had the blessing of IranÂ’s government. Britain evacuated its staff from the mission and ordered Iranian diplomats out of the U.K. The assault prompted international condemnation, and Italy, France and Germany recalled their ambassadors from Iran. The U.S. administration opposed the Senate sanctions against Iran on the grounds that by targeting an important oil supplier for Asia and Europe, the move threatens to fracture the international coalition backing coordinated pressure on the country and may send oil prices soaring if world supply is perceived to be in jeopardy.
Oil-Price Risk
“There’s absolutely a risk” that “the price of oil would go up, which would mean that Iran would, in fact, have more money to fuel its nuclear ambitions, not less,” Undersecretary of State Wendy Sherman told the Senate Foreign Relations Committee yesterday before lawmakers voted. EU states are also grappling with the implications of sanctions aimed at strangling Iran’s crude exports. “Greece has a certain number of reservations” about an oil cutoff, French Foreign Minister Alain Juppe told reporters in Brussels yesterday. “We have to take account of them and work with the different partners so that the interruption of Iranian deliveries can be offset by higher production in other countries.” Oil had its first gain in three weeks amid concern that tension between Iran and the west will disrupt Middle East exports. Futures gained 76 cents, or 0.8 percent, today to $100.96 a barrel on the New York Mercantile Exchange, the highest settlement since Nov. 16. Prices increased 4.3 percent this week.
UN Report
