Further US sanctions may fail to cut Iran oil sales

Media reports say that the US Congress is set to pass a bill to further squeeze Iran’s oil exports – and its nuclear programme – but new sanctions may fail to cut Iran’s crude sales. However, Tehran says its nuclear programme is for generating electricity and medical devices.

The Senate Banking Committee this month is expected to begin debating its version of a package of sanctions that easily passed in the House of Representatives in late July. The House bill would cut Iran’s exports to global customers by an additional 1 million barrels per day in a year, on top of US and European Union sanctions that have about halved Tehran’s oil sales since 2011.

The US government believes Iran’s nuclear programme will soon have the ability to develop weapons and that further reducing the country’s oil sales could shut the programme down by starving it of funding.

Deeper cuts in Iran’s oil sales, if accomplished, could worsen the damage Western sanctions have already done to Iran’s economy, which suffered a loss of about $26 billion in petroleum revenue in 2012 from a total of $95 billion in 2011; soaring inflation; and a devaluation of its currency, the rial.

Senators from both parties have begun private talks on closing loopholes in existing sanctions, forcing reductions in Iran’s oil sales at a faster pace than the House bill would and ending the ability of the State Department to waive sanctions on Iran’s oil customers, aides said.

Many want to pass tougher sanctions to show Iran’s new president, Hassan Rouhani, a relative moderate, that Washington is serious about pressuring the nuclear program.