The U.S. administration is preparing to employ additional sanctions against Iran in the coming days following Tehran’s weekend aerial assault on Israel, Treasury Secretary Janet Yellen confirmed to reporters on April 16.
Ms. Yellen refrained from revealing what tools the White House could use to punish the Iranian regime for its attack on Israel. She stated that “all options to disrupt terrorist financing of Iran continue to be on the table” and that the Treasury will use “economic tools to counter Iran’s malign activity.”
The senior administration official said Iran’s oil exports could be “a possible area” to address.
“Since the start of the administration, our sanctions have targeted over 500 individuals and entities connected to terrorism and terrorist financing,” she said before the spring meetings of the International Monetary Fund and World Bank. “Since Oct. 7, in addition to robust Hamas sanctions, we have also acted against 117 people, entities, and vessels tied to financing of Iran’s destabilizing activities.”
National Security Council communications adviser John Kirby told reporters on April 15 that President Joe Biden and administration officials were working with G7 leaders on ironing out “new multilateral sanctions to target Iran’s missile and other nefarious programs.”
“And going forward, we will be working to further isolate Iran internationally and increase economic and other forms of pressure,” Mr. Kirby said at a White House press briefing.
He declined to reveal what the sanctions could involve.
“Part of the discussion with the G7 leaders was the possibility of additional sanctions on Iran unilaterally and ... hopefully multilaterally, but we’ll see where that goes,” he said.
In the coming weeks, House Republicans plan to submit several bills aiming to punish the Iranian regime.
Rep. Steve Scalise (R-La.), for example, told Fox News on April 14 that the current administration has made it easier for Tehran to sell its oil and generate revenues to “go fund terrorist activity.”
GOP caucus members have alluded to the White House’s issuing a 120-day waiver allowing Iraq to purchase electricity from Iran as one of the ways Washington has enabled Tehran.
While speaking to ABC News on April 15, Sen. Joni Ernst (R-Iowa) urged President Biden to enforce sanctions on Iran immediately. She said her co-sponsored legislation “would help stop the flow of Iranian oil and hold Biden accountable.”
State of Iranian Oil
Market watchers note that the White House might be reluctant to target Iran’s oil and gas sector as crude prices have been surging this year because of geopolitical strife and tighter energy markets.Brent crude, an international benchmark of oil prices, has rocketed by about 17 percent year to date to about $90 a barrel on London’s ICE Futures Exchange. Gasoline prices have risen by roughly 17 percent, to above $3.64 per gallon, according to the American Automobile Association.
The upward push in oil prices has renewed U.S. inflation fears following four consecutive hotter-than-expected consumer price index reports. In March, the annual inflation rate rose to 3.5 percent.
Javier Blas, an energy and commodities strategist, recently warned in a Bloomberg column that enforcing sanctions on Iran would exacerbate energy price pressures.
“If Biden resumes enforcing the sanctions, it could tighten the market significantly unless OPEC+ offsets the impact. I’m dubious Biden would take that course of action,” he said.
In December 2023, Iran was the third-largest producer of crude oil within OPEC, after Saudi Arabia and Iraq. Its output is about 4 million barrels per day, representing approximately 4 percent of total worldwide production, according to the U.S. Department of Energy.
Tehran’s crude output has increased by 20 percent over the past two years, and officials aim to bolster domestic production capacity to 5.7 million barrels per day by 2031.
Iranian production efforts have been enabled by robust foreign demand.
During the Trump presidency, Iran’s oil exports plummeted. In 2023, oil exports were revised, increasing by 50 percent to a five-year high of roughly 1.29 million barrels per day. While most of its energy shipments were sent to China, industry observers say it also serviced several European markets, including Bulgaria, Germany, and Spain.
“Most of Iran’s oil exports go to China directly and indirectly. Small amounts go to Europe,” said Anas Alhajji, an energy economist at NGP Energy Capital Management.
He said that estimates “have exaggerated Iran’s oil production increases in 2023” and that the country’s floating storage “has vanished.” Industry projections show that Iran’s floating oil storage levels plunged from 26.5 million barrels in December 2023 to 10 million barrels in early 2024.
Experts believe that this trend could help the nation accelerate its oil exports.
The Atlantic Council recently asserted that oil revenue from China “is propping up the Iranian and Russian economies and is undermining Western sanctions.”
“China has developed a way to import Iranian oil while bypassing the Western financial system and shipping services,” the think tank wrote.
