President Barack Obama gave the go-ahead for fresh sanctions against Iran’s oil sector Friday, judging there is enough oil on world markets to ensure the move will not hit US consumers.
With just hours to go before a legal deadline, Obama determined the United States could levy sanctions against banks and other financial institutions buying oil from Iran, without roiling markets.
The step is expected to have major implications for Tehran, essentially forcing companies around the world to choose between trade with the United States and buying Iranian oil.
China, South Korea, India, France, Britain, Spain, Greece and Italy have all been major buyers of Iranian oil in the past.
Oil and gas form the backbone of the Iranian economy and are vital to the survival of the Islamic regime, which has been in power since a 1979 revolution.
Iran’s energy industry accounts for 70 percent of Tehran’s revenues.
The sanctions are part of a broader effort by Western governments to push Iran toward abandoning programs that could be aimed at producing nuclear weapons, to stop support for proscribed groups and to end human rights abuses.
Shortly before Obama’s announcement, Turkey’s national oil company Tupras said it had cut purchases of Iranian oil by 20 percent.
In a presidential statement, Obama said: “There is a sufficient supply of petroleum and petroleum products from countries other than Iran to permit a significant reduction in the volume of petroleum and petroleum products purchased from Iran by or through foreign financial institutions.
“I will closely monitor this situation to assure that the market can continue to accommodate a reduction in purchases of petroleum and petroleum products from Iran.”
Oil prices in New York rose slightly on the news, increasing around a dollar a barrel for the benchmark futures contract, to reach $104 a barrel.
[Oil field image via Shutterstock.com.]