President Obama: Oil Supply Enough to Keep Squeeze on Iran

US President Barack Obama has approved the introduction of new sanctions on buyers of Iranian oil.

In a statement released Friday, President Obama promised US allies boycotting Iranian oil would not suffer as there was enough oil in the world market. Photo: White House

Barack Obama approved Friday the tightest sanctions yet against Iran’s oil industry, a move that could cause the rise of fuel prices even higher ahead of the November elections and worsen tensions with Tehran.

The sanctions were passed by Congress in December, but the lawmakers allowed Obama to make the final decision about the impact a reduction in Iranian oil would have on the US and the world economy, reports The Guardian.

In a statement from the White House, Obama said he decided that though oil supplies are tight, there are enough non-Iranian supplies to allow countries to reduce imports from Iran.

“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,” he said.

The President had been expected to press on with the sanctions to pressure Iran to curb its nuclear program, which the West suspects is a cover to develop atomic weapons but which Iran says is purely civilian, Reuters writes.

The mention of government-controlled stockpiles may cause further speculation that major consumer nations are preparing to tap their emergency stores this year.

“I do think it was interesting that it was laid out there,” said David Pumphrey, an analyst at the Center for Strategic and International Studies. “It was sort of like a reminder that yes, this is part of the tool kit,” said Pumphrey, a former Energy Department official.

A statement from the White House cites that “a series of production disruptions in South Sudan, Syria, Yemen, Nigeria and the North Sea have removed oil from the market” in the first months of 2012.

“Nonetheless, there currently appears to be sufficient supply of non-Iranian oil to permit foreign countries to significantly reduce their import of Iranian oil,” the statement says.

“In fact, many purchasers of Iranian crude oil have already reduced their purchases or announced they are in productive discussions with alternative suppliers.” The new sanctions will affect other heavy importers of Iranian oil such as South Korea, India, China, Turkey and South Africa.

“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,” Senator Bob Menendez, who co-authored the sanctions legislation, said.

Senior administration officials declined comment on the proposed new sanctions.

“We welcome the president’s determination and applaud the administration’s faithful implementation of the Menendez-Kirk amendment,” said a spokesman for Senator Mark Kirk, a Republican who has pushed for additional measures.

“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 Iranian regime,” Kirk’s spokesman said.

The U.S. sanctions are set to take effect on June 28. A European oil embargo, approved in January, starts in July.

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