Obama issued a determination Friday that there are enough sources of oil
around the world to allow all Iran's customers to stop buying its crude.
decision was required by a section of the latest defense authorization bill,
which included new sanctions against the Central Bank of Iran and any other
country that does business with Iran. Countries can be exempted from those
sanctions if they "significantly reduce" their oil business with Iran, and the
president was required to decide if the world oil market could absorb that
demand before the sanctions could be fully implemented.
carefully considering the report submitted to the Congress by the Energy
Information Administration on February 29, 2012, and other relevant
information, and given current global economic conditions, increased production
by certain countries, the level of spare capacity, and the existence of
strategic reserves, among other factors, I determine, pursuant to section
1245(d)(4)(B) and (C) of the National Defense Authorization Act for Fiscal Year
2012, Pub1ic Law 112-81, that 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 andpetroleum products purchased from Iran
by or through foreign financial institutions," Obama wrote in a Friday
"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."
Department exempted 11 countries from the Central Bank sanctions
earlier this month and has until June 28 to decide whether to sanction the
other 12 countries that buy crude oil from Iran, a list that includes China,
India, South Korea, and Turkey. This determination allows that process to
continue moving forward.
determination was not a surprise. A Feb. 29 report from the Energy Information
Agency stated that Saudi Arabia was pumping more oil than usual but also found
that spare capacity in the oil market was modest by historical standards.
Energy Secretary Steven Chu seemed to preview the determination March 1
when he said, "There
is spare capacity and we believe -- we'll see -- but I think there is
sufficient spare capacity."
a conference call with reporters Friday afternoon, two senior administration
officials touted the administration's effort to use the sanctions to persuade
other countries to wean themselves off of Iranian oil and said the
administration expected South Korea to move away from Iranian oil purchases
soon and Turkey announced
related moves today.
our belief that these sanctions are having a significant impact on the Iranian
government and the Iranian economy and that therefore they present the
strongest pressure we've placed to date to effect Iran's political calculus
about pursuit of nuclear program, particularly as we move toward P5+1
negotiations," one senior administration official said.
official neglected to mention that the administration publicly opposed the legislation
that created the sanctions, written by Sens. Robert Menendez (D-NJ) and Mark
Kirk (R-IL), which was added to the defense authorization bill over administration
objections and passed by the Senate by a vote of 100-0.
a statement Friday, Menendez praised Obama's determination.
we put on notice all nations that continue to import petroleum or petroleum
products from Iran that they have 3 months to significantly reduce those
purchases or risk the imposition of sanctions on their financial institutions,"
Menendez said. "It is my opinion that most countries will
significantly reduce their purchases by the June 28 deadline -- either because
of the sanctions or because they share the U.S., EU, and IAEA's grave concerns
about Iran's verified effort to acquire nuclear weapons capability."
The Cable asked the
officials whether they supported the Johnson-Shelby
Iran Sanctions, Accountability and Human Rights Act of 2012, which Senate
Majority Leader Harry Reid (D-NV) tried to speed
the Senate this week without any debate or amendments.
"We're not just taking a position
on that particular bill at this point," the official said.
asked whether the administration had a position on the right of senators to
offer amendments to the Johnson-Shelby bill, in light of Reid's position that
there is simply no time to offer amendments to the legislation.
made any specific determinations with regard to that amendment," the official said.
We didn't ask about any specific
amendment, but it's possible the official was referring to a new amendment from the office of Kirk, which would
expand sanctions on the Central Bank of Iran to include all Iranian banks and
would threaten sanctions on any international firms that facilitate those
banks' transactions, including the EU-based international transactions
facilitator SWIFT and Clearstream, a firm that works with SWIFT to process
worldwide money exchanges. Swift announced
it would stop processing transactions with Iran's Central Bank earlier this month.
Kirk's new amendment would also target the Iranian insurance industry,
expand sanctions against the Iranian energy sector, target Iran's high-tech and
telecommunications sectors, and try to narrow the conditions under which the
administration can exempt third countries who are still buying oil from Iran
from existing sanctions.
"We welcome the president's determination and applaud the administration's
faithful implementation of the Menendez-Kirk amendment," a Kirk spokesperson
told The Cable. "To build on
this momentum, we hope the Senate will consider amendments to the pending Iran
sanctions bill that would continue to increase the economic pressure on the