US Congress concerned Iran’s oil exports may be up

01-Mar-2014 Intellasia | AP | 6:00 AM Print This Post

Obama administration officials faced the prospect of contentious questioning Thursday from US lawmakers about reports that China and India are significantly expanding imports of Iranian petroleum.

When world powers reached an interim nuclear deal with Iran three months ago, US officials stressed that they weren’t easing oil trade restrictions against Tehran. This month, President Barack Obama threatened to come down like a “tonne of bricks” on countries that circumvent those penalties.

Nevertheless, Chinese imports of Iranian crude have jumped nearly 30 percent since November compared with the previous six months, according to government data. Some reports suggest Indian imports doubled in January; US officials believe the growth was far more modest.

Some lawmakers are concerned. Aides to two members of Congress said their bosses planned to raise the issue at a classified briefing Thursday by the State Department’s nuclear negotiator, Wendy Sherman, and the Treasury Department’s sanctions chief, David Cohen.

“We obviously are watching this closely in keeping with the expectation that we have that all nations will abide by their commitments under the sanctions regime,” White House press secretary Jay Carney said. He said import levels can fluctuate month to month, and the critical test is whether they grow “over a longer period of time.”

The administration and Congress see economic pressure as the primary leverage to get Iran to accept tighter conditions on uranium enrichment activity and to abandon plans for plutonium production. The goal is a final agreement this year that builds on the interim accord and makes it impossible for Tehran to surreptitiously develop nuclear weapons.

November’s agreement provided the Iranian economy up to $7 billion in relief from the economic penalties in exchange for a series of limits on the nuclear programme, which Iran insists is designed solely for peaceful energy and medical research purposes. The deal was supposed to keep Iranian oil exports at about 1 million to 1.1 million barrels per day.

Despite suggestions to the contrary, Iran’s exports have remained constant since the agreement, insisted a US official, who wasn’t authorised to speak publicly on the matter and demanded anonymity.

The official said some month-to-month fluctuations have occurred, but the long-term trajectory shows China reducing its imports of Iranian oil even amid an overall growth in its demand for fuel. Indian imports are down 40 percent since 2011, the official added.

That assessment is disputed by Nat Kern of the Washington-based energy consultancy Foreign Reports. He said reported data appears to back up the claim China and India imported 1 million barrels per day by themselves last month. Add in other Asian countries and Turkey, and Iran’s total oil exports already could be as much as 1.4 million barrels per day, he said, providing Tehran with a windfall of some $1.3 billion per month.

Members of both parties in Congress, along with Israeli and Sunni Arab officials, have warned the interim agreement could yield significantly greater economic benefit than Obama has claimed. Skeptics have pointed to any increase in oil sales as evidence the penalties are unraveling without a deal fully addressing the Iranian nuclear threat.

The US must decide by May whether to extend an exemption from the American penalties to Chinese and Indian banks continuing to process Iranian oil transactions. To receive the waiver, countries are supposed to be significantly reducing their Iranian crude imports.

In the alternative, Chinese and Indian banks that keep processing Iranian oil transactions would be shut out of the US economy. That could be devastating for the American and global economy.


Category: ResourceAsia

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