Obama moves ahead with Iran oil sanctions

President Barack Obama waves as he boards Marine One helicopter on the South Lawn of the White House in Washington, March 30, 2012, as he travels to Vermont and Maine. / AP Photo/Charles Dharapak

(AP) WASHINGTON - President Barack Obama is moving ahead with tough new sanctions aimed at squeezing Iran's oil exports after determining there is enough crude on world markets to take the step without harming U.S. allies.

Obama's move allows the U.S. to go forward with sanctions on foreign banks that continue to purchase oil from Iran. The sanctions aim to further isolate Iran's central bank, which processes nearly all of the Islamic Republic's oil purchases, from the global economy.

U.S. officials hope ratcheting up economic pressure will both push Iran to abandon its disputed nuclear program and convince Israel to give sanctions time to take hold before pursuing a military strike on Iran's nuclear facilities. The U.S. and allies believe that Iran is pursuing a nuclear bomb; Iran denies that.

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Under a sweeping defense bill Obama signed at the end of December, he had until Friday to determine if there was enough oil supply on the world market to allow countries to cut their oil purchases from Iran.

Obama announced his decision in a statement Friday after a source initially confirmed the news to The Associated Press.

The president said he based his determination on global economic conditions, the level of spare oil capacity and increased production by some countries, among other factors. He said he would keep monitoring the global market closely to ensure it can handle a reduction of oil purchases from Iran.

With oil prices already rising this year amid rising tensions over the nuclear dispute between Iran and the west, U.S. officials have sought assurances that pushing countries to stop buying from Iran would not cause a further spike in prices.

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That's particularly important for Obama in an election year that has seen an increasing focus on gas prices.

The congressionally mandated sanctions target foreign financial institutions that do business with Iran's central bank — barring them from operating in the U.S. to buy or sell Iranian oil. The penalties are to take effect at the end of June, around the same time Europe's embargo on Iranian oil kicks in.

Countries can still avoid the sanctions if they take steps to significantly reduce their imports before then.

Domestic and foreign policy concerns have complicated the administration's decision to pursue the oil sanctions.

Many of the countries that buy oil from Iran are U.S. allies, including several European Union nations, Japan, South Korea and India. In order to provide flexibility to countries friendly to the U.S., the sanctions bill allows the U.S. to grant waivers to nations that significantly reduce their purchases of Iranian oil.

Even before Friday's decision, the State Department announced that it would grant waivers to 10 European Union countries and Japan because of steps they have already taken to cut back on Iranian oil. An E.U. oil embargo, approved in January, is set to take effect in July.

Sen. Bob Menendez, D-N.J., who co-authored the sanctions legislation with Republican Sen. Mark Kirk of Illinois, said he welcomed Obama's support in targeting Iran's Central Bank. Menendez's office says he was also notified of the decision earlier Friday

"Today, we put on notice all nations that continue to import petroleum or petroleum products from Iran that they have three months to significantly reduce those purchases or risk the imposition of severe sanctions on their financial institutions," Menendez said in a statement.

He predicted most countries would cut their purchase of oil from Iran, either out of fear of sanctions, or a shared fear over the Iran's pursuit of nuclear weaponry.

The United States has not said what constitutes a significant reduction in Iranian oil purchases, and analysts believe the administration could use different metrics for different countries.

Administration officials say a February report from the Energy Information Administration shows there is excess oil supply on the global market. But the report also showed that prices are high.

[rayward73446]

When the supply and demand does not matter anymore the market is being manipulated by it's biggest players. The GOP's stance on backing big oil in everything they do as an industry has led to the artificially high prices of oil and gasoline. Speculators are a large part of the problem too. Especially if the same oil is traded multiple times driving up the price of oil. The US is now a major exporter of refined fuels to a world wide market. Refiners and large producers of oil are now making billions by not fucusing on the US market. There is no incentive to lower prices here when they can get more by shipping refined fuel abroad. This was a wise busines move by the oil industry, but it placed the US market at a disadvantage. We are now competing for refined fuels on an international market than before the industry began selling abroad. The US oil market must be modified, or regulated to gain back our national oil market based on supply and demand. Until we develop a national oil policy that is truely based on supply and demand we are all going to suffer high gas prices.

[sandiegopete]

Or better yet, sanctions against the Idustrial and Commercial Bank of China? How would that work. By the way, does Goldman Sachs still own a part of ICBC?

[sandiegopete]

Gee, I'm trying to visualize what sanctions we would put on the Bank of China.

[smittyc]

Good intentions but it appears it is a futile effort. Iran has already begun cutting off oil to Europe and signed new contracts with China.

[RCRawlings]

I see another Obama blunder unfolding that will only cost us more at the gas pumps and more military expenses if he can't bluff Iran. Too bad for Obama that they have seen him capitulate and change his stance too many times this year alone.
We shall see what develops in the coming months.

[euge005]

Forget this effort, ask Congress for a declaration of war and nuke Qum (where the regime trains their fanatics) & the nucular sites. End that regime, their mad death cult and the threat. But if Obama proposed that tomorrow, the GOP would be opposed and insist on more negotiation. Their vain attempt to keep him for fixing the mess they caused will conctinue at any cost to freedom and this country. Their owners will pay for nothing less.

[realtimecoffee]

If President Obama proposed NUKING Qom, then I would sure hope the Republicans would oppose, and Democrats as well.

[fedup12]

So in the same day we have Santorum saying Obama isnt tough enough on Iran.

Then we have a story of him going ahead with oil sanctions against Iran.

Im so confused. Is Sactorum a liar? Being a good christian guy???

[realtimecoffee]

I suspect your confusion is feigned.

[sandiegopete]

Gasoline prices are set by the oil companies. They decide what they can get away with and charge accordingly. Oil refiners and speculators buy and sell oil until the price is up as high as the market will bear. In today's globalized economy there is no regulation of the oil markets and cartels can determine how much oil they will produce and at what price.

None of this will have any effect on the average voter since it takes about 20 years for the average voter to understand any change in applied economics.

[realtimecoffee]

And the shortcut is they blame the Presiddent. Like Carville said, it's the economy stupid. In this case gas. (and maybe hamburgers)

[realtimecoffee]

And if this doesn't work then war, yes? Or is it all a big bluff? And more important does Iran think it's all a big bluff? A lot of ways it can go wrong and only a few ways it can go right.

[thelovegod]

Hey, just reading about the extended stock rally. And unemployment dropped again yesterday.

I'm sorry, but wasn't Obama supposed to have tanked the economy by now?

Can you say bag the tea baggers?

[realtimecoffee]

My guess is if gas goes up he loses, if gas goes down he wins. It's not fair, it's politics.