US Senate approves Iran sanctions

Tue, May 22, 2012, 01:00

The US Senate has unanimously approved a package of new economic sanctions on Iran's oil sector just days ahead of a meeting in Baghdad between major world powers and Tehran.

The sanctions add to a raft of punitive measures by the United States and the European Union aimed at shrinking Iran's oil revenues to force it to halt a nuclear programme the West suspects is being used to build an atomic bomb.

Iran has said its nuclear programme is for civilian purposes.

The new package would extend sanctions to cover dealings with the National Iranian Oil Co and National Iranian Tanker Co, if they are deemed to be an agent or affiliate of the Revolutionary Guards. It aims to close a potential loophole that could have allowed Tehran to continue selling some of its oil using its own fleet.

The House of Representatives passed its version of the bill in December and now the Senate and House must work out their differences in the legislation before it is signed into law by president Barack Obama.

"This bill is another tool that will demonstrate to Iran that the United States is not backing down," Robert Menendez, the Democratic senator who helped craft the legislation, said on the Senate floor yesterday.

The Senate bill was brought up on Thursday but was blocked by Republicans who wanted some parts toughened up.

Iran, Opec's second-largest producer, exports most of its 2.2 million barrels of oil per day to Asia, home to its four main customers: China, Japan, India and South Korea.

All four nations have cut back on their purchases, dissuaded by the previous package of US financial sanctions that due to take effect at the end of June as well as an EU oil embargo and a ban on shipping insurance, which take effect on July 1st.

The US sanctions threaten to shut out importers of Iranian oil from the US financial system unless they make substantial, sustained cuts to their purchases.

Washington has already granted 10 EU nations and Japan a waiver from these measures and is pressuring Iran's main buyers China and India to comply.

In addition to totally banning Iranian oil imports, the EU measures prohibit European insurers from covering Iranian oil exports anywhere in the world, which would leave importers exposed to personal injury and pollution claims.

South Korea will effectively become the first of Iran's major Asian customers to halt purchases from July due to the ban.

The escalating Western sanctions, and threats by Israel and the United States of last-ditch military action, have helped to push up world oil prices, compounding the economic misery wrought by debt crises in many industrialised countries.

The UN nuclear watchdog chief held talks in Tehran yesterday ahead of a meeting between major powers and Iranian officials this week, but there was no immediate sign of a breakthrough.

During the meeting in Baghdad, the United States, Britain, France, Russia, China and Germany will try and make Iran stop the higher-grade uranium enrichment it started two years ago and has since expanded.

Reuters