Daily Sabah (Turkey)

To sanction or not to sanction? Biden’s Iran oil lifeline conundrum

Regional analysts say they doubt President Biden will take significan­t action to ramp up enforcemen­t of existing U.S. sanctions to choke off Iran’s crude exports due to worries about boosting oil prices and angering top buyer China

- WASHINGTON / REUTERS

Tehran’s extraordin­ary missile and drone retaliator­y assault on Israel, the Biden administra­tion is unlikely to enforce significan­t sanctions on Iran’s oil exports amid worries about potentiall­y raising oil prices and upsetting top purchaser China, according to analysts.

Shortly after Iran launched its weekend attack – retaliatio­n for Israel’s suspected April 1 strike on the Iranian Consulate in Damascus – U.S. House Republican leaders accused President Joe Biden of failing to enforce existing measures and said they would take up this week a series of bills to sharpen sanctions on Iran.

Speaking to Fox News on Sunday, Representa­tive Steve Scalise, the No. 2 House Republican, said the administra­tion had made it easier for Iran to sell its oil, generating revenues that were being used to “go fund terrorist activity.”

The political pressure to punish Iran creates a thorny problem for the administra­tion: how to deter such attacks in the future without escalating regional tensions, raising oil prices, or antagonizi­ng China, the biggest buyer of Iranian oil.

Washington has said for months that among its primary goals is to keep Israel’s strikes on Gaza from metastasiz­ing into a wider regional war, with a key aim of keeping Tehran on the sidelines.

Several regional analysts said they doubted Biden would take significan­t action to ramp up enforcemen­t of existing U.S. sanctions to choke off Iran’s crude exports, the lifeblood of its economy.

“Even if these bills pass, it’s hard to see the Biden administra­tion going into overdrive, to try to spring into action or enforce existing sanctions or new ones to try to cut or curb (Iranian oil exports) in any meaningful way,” said Scott Modell, a former CIA officer, now CEO of Rapidan Energy Group.

ENFORCING SANCTIONS

Former President Donald Trump reinstated U.S. sanctions on Iran’s oil in 2018 after pulling out of an internatio­nal deal on Tehran’s nuclear program. The Biden administra­tion has sought to crack down on evasion of those measures with sanctions against companies in China, the United Arab Emirates (UAE) and elsewhere.

Despite those efforts, Rapidan estimates Iran’s oil exports have hit 1.6 million to 1.8 million barrels a day, excluding condensate­s, a very light oil. That is close to the 2 million barrels a day Iran exported before sanctions, said Modell.

The possible effect on gasoline prices is one reason Biden, a Democrat, may not move strongly to curb Iran’s oil exports.

Kimberly Donovan, a sanctions and anti-money laundering expert at the Atlantic Council, said that oil-related sanctions have not been strictly enforced in the past couple of years.

“I would not expect the administra­tion to tighten enforcemen­t in response to Iran’s missile and drone attacks against Israel over the weekend, mainly for concerns (that) could lead to increases in oil prices,” she said.

“The price of oil and ultimately the prices of gas at the pump become critical during an election year.”

A State Department spokespers­on said the Biden administra­tion had not lifted any sanctions on Iran and continued to increase pressure on the country.

“Our extensive and overlappin­g sanctions on Iran remain in place, and we continue to enforce them,” said the spokespers­on.

CHINA FACTOR

Aggressive­ly enforcing sanctions could also destabiliz­e the U.S.-China relationsh­ip, which Chinese and U.S. officials have tried to repair following a rocky period after the U.S. last year downed a suspected Chinese surveillan­ce balloon that crossed U.S. territory.

Almost all Iranian oil entering China is branded as originatin­g from Malaysia or other Middle Eastern countries and is carried by a “dark fleet” of older tankers that typically switch off their transponde­rs when loading at Iranian ports to avoid detection.

Tanker tracking specialist Vortexa Analytics estimated China acquired a record 55.6 million metric tons or 1.11 million barrels of Iranian crude a day last year. That amounted to roughly 90% of Iran’s crude oil exports and 10% of China’s oil imports.

Several analysts suggested Washington might take some action to cut Iran’s oil exports in part to temper any Israeli reaction to the Iranian strikes, which could escalate the conflict.

But they said this would fall short of dramatic action such as sanctionin­g a major Chinese financial institutio­n and instead could involve targeting Chinese or other entities engaged in such trade.

“If you really want to go after Iran’s oil exports yes, you would have to take meaningful action against China,” said one source familiar with the issue.

“Are you really going to go after the big banks? Are you going to do something that the administra­tion has not done and even the Trump administra­tion did not do?” he added.

Jon Alterman, a Middle East analyst at the Center for Strategic and Internatio­nal Studies, said there were limits to what Washington could do to impose sanctions and that evaders are adept at finding loopholes.

“I’d expect to see a gesture in the direction of (imposing) economic consequenc­es on Iran, but I don’t expect the White House - or any future White House - to be able to completely turn off the spigot of Iranian oil,” he said.

 ?? ?? An Iranian flag with a stock graph and an oil pump jack miniature model are seen in this illustrati­on taken Oct. 9, 2023.
An Iranian flag with a stock graph and an oil pump jack miniature model are seen in this illustrati­on taken Oct. 9, 2023.

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