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US Moving to Undercut Iran Oil Markets

The U.S. government is trying to shrink the market for Iranian oil to deprive Tehran of funds for its nuclear program. And Iranian consumers are feeling the effects.

As the world's third-largest exporter of crude oil, Iran is a major supplier for China, Japan and India, as well as the European Union. The United States is pushing to dry up that market because it says Iran uses oil profits to develop nuclear weapons.

“What we are saying to all of our allies and partners around the world is that we are encouraging everybody to buy less Iranian crude, as little as possible, to find alternative sources of supply in the context of the economic squeeze that all of us are trying to put on Iran to encourage Iran to come clean with the international community about its nuclear weapons program,” said US State Department spokeswoman Victoria Nuland.

China says Iran wants to return to talks about its nuclear program, so there is no reason to embargo oil sales.

"Iran has expressed its willingness to enhance cooperation with the International Atomic Energy Agency and to start a new round of fruitful dialogue on nuclear issues with China, Russia, Britain, France, Germany and the United States,” said Chinese Assistant Foreign Minister Ma Zhaoxu.

The United States and its allies say sanctions will slow Iran's pursuit of a nuclear weapon. But Johns Hopkins University professor Ruth Wedgwood says it may be too late.

“The timeline for sanctions having any bite is a long one," said Wedgwood. "And the concern about the timeline for Iran having its own capacity to produce a bomb, given its ambition to do so, is unknown and could be shorter.”

Iran's neighbors Iraq and Turkey are concerned about growing tension over its nuclear program and how sanctions on Iran could affect them, and the Iranian tourists who visit.

Turkish Foreign Minister Ahmet Davutoglu says Ankara wants a resolution that protects regional security without infringing on Iran's rights.

“Iran must ensure that there will be no military dimension of their nuclear technology, but at the same time, the right of having peaceful nuclear technology should be given to all nations including Iran,” said Davutoglu.

As the value of the Iranian rial hits record lows against the dollar, consumers are feeling the sanctions, despite what State Department spokeswoman Nuland says are allowances for food and medicine imports.

“We do regret that this is having an impact on people, but it’s having an impact on people because their government is making a very bad choice for Iran’s future, and frankly, for regional security and global security,” said Nuland.

With central bank sanctions hurting Iran's economy, efforts to undercut oil revenue will have a larger effect as a European Union ban on Iranian crude takes full effect in July.