Oil Payments Targeted
President Barack Obama today signed legislation imposing sanctions on financial institutions dealing with the Central Bank of Iran (CBI). The new law, approved by Congress last week, is intended to reduce Iran’s oil revenues by curtailing the ability of Iran’s oil customers to make payments for imports that must go through the CBI, the main conduit for Iran oil transactions. The legislation, however, gives the president the authority to waive sanctions on case-by-case basis.
Reuters reported that senior US officials were engaging with allies to ensure the sanctions can work without harming global energy markets. The US is also expected to continue its strategy of engaging with Iran despite the new sanctions.
Last week, the Iranian officials had threatened to close the Strait of Hormuz, stopping the flow of oil from the Persian Gulf, if the new legislation would curtail Iran’s ability to export its oil.
UPDATE: The sanctions against the private and state banks—including CBI—would take hold after a two- to six-month warning period, depending on the transactions, a senior administration official has told Reuters.
Under the law, the president can move to exempt institutions in a country that has significantly reduced its dealings with Iran and in situations where a waiver is in the US national security interest or otherwise necessary for energy market stability. He would need to notify Congress and waivers would be temporary, but could be extended.
“Our intent is to implement this law in a timed and phased approach so that we avoid repercussions to the oil market and ensure that this damages Iran and not the rest of the world," the senior US official told Reuters [Reuters, 31 December].