News / USA

US Says Iran Oil, Energy Investment Sanctions Still in Force

FILE - Malta-flagged Iranian crude oil supertanker
FILE - Malta-flagged Iranian crude oil supertanker "Delvar" is seen anchored off Singapore, March 1, 2012.
Reuters
The nuclear deal signed on Sunday will not allow any more Iranian oil into the market, or let western energy investors into the country, but it does freeze U.S. plans for deeper cuts to Iranian crude exports, Washington says.

Iran and six world powers reached a breakthrough deal early on Sunday to curb Tehran's nuclear program in exchange for limited sanctions relief.

But U.S. and EU sanctions on Iran's energy sector, which have prevented western energy companies from dealing with Tehran, and slashed its oil exports from 2.5 million barrels per day (bpd) to around 1 million bpd, will remain in place.

“In the next six months, Iran's crude oil sales cannot increase,” a fact sheet posted by the White House on the U.S. State Department's website on Sunday said.

“Under this first step, the EU crude oil ban will remain in effect and Iran will be held to approximately 1 million bpd in sales, resulting in continuing lost sales worth an additional $4 billion per month, every month, going forward.”

Western pressure on Iran's mainly Asian oil customers to find other suppliers has supported global oil prices over the last two years. Rising U.S. and Saudi production has helped dampen the impact of around 1.5 million barrels per day of Iranian oil being shut out.

U.S. lawmakers had planned further cuts in Iran's oil exports but Washington has pledged not to impose new nuclear-related sanctions over the next six months, so long as Iran sticks to its side of the deal.

Less crude from Iran would increase pressure on regional rival Saudi Arabia to squeeze more out of oilfields that have already been pumping at record levels this year.

Benchmark Brent crude hit a six-week high of $111.40 on Friday on early uncertainty over whether an agreement over Iran's nuclear program would be reached.

Brent eased late on Friday on renewed hopes that the long-awaited deal would be struck, closing the week on $111.05 a barrel. Oil markets are closed on Sunday.

Little relief

The White House estimates that Iran has lost more than $80 billion since the beginning of 2012 because of lost oil sales. It also estimates Tehran's earnings over the next six months will be $30 billion down compared with a six-month period of 2011, before sanctions were imposed.

U.S. sanctions effectively bar Iran from repatriating earnings from oil exports, forcing customers to pay into a bank in their country.

Washington estimates that Iran has around $100 billion in foreign exchange earnings trapped in such accounts.

Under the terms of the deal, Iran will be allowed access to $4.2 billion of oil export revenues. But nearly $15 billion will still flow into accounts overseas over the next six months, according to the U.S. government.

“We expect the balance of Iran's money in restricted accounts overseas will actually increase, not decrease, under the terms of this deal,” the White House fact sheet said.

The U.S. government has also suspended some restrictions on gold and precious metals trade and lifted sanctions on Iran's petrochemical exports that were imposed earlier this year.

Other energy sanctions

Iran is home to some of the world's largest oil and gas reserves but U.S. energy firms have been barred by Washington from Iran for nearly two decades.

Several European oil and gas companies had planned multi-billion dollar investments over the last decade to help develop Iranian reserves.

However, U.S. pressure drove European energy companies away from Iran in the late 2000s, for fear of jeopardizing their interests in the U.S. market if they stayed.

Western companies, whose technology Tehran needs to fully exploit its oil and gas riches, are keen to go back into Iran when sanctions are lifted.

Despite the landmark deal struck on Sunday, U.S. restrictions on trade, including those banning long-term investment or provision of technical services to Iran's energy sector, are still in place.

Sanctions preventing the sale of petroleum products to Iran, which needs to import such fuels because it lacks refining capacity, also remain in effect.

Potential buyers of Iranian crude have found it difficult to insure their multi-million dollar shipments, because of wide-ranging restrictions on providing financial services for Iranian trade.

The White House fact sheet says that financial sector sanctions remain intact, along with those affecting Iranian shipping companies.

However, a senior western official said on Sunday that relief on EU sanctions on oil shipping insurance was included in the deal.

The EU could relax insurance restrictions without causing a rebound in Iranian oil exports by only allowing customers to insure their current volume of oil purchases and no more. It is unclear how the EU would police this.

You May Like

Video One Year After Thai Coup, No End in Sight for Military Rule

Since carrying out the May 22, 2014 coup, the general has retired from the military but is still firmly in charge More

Goodbye, New York

This is what the fastest-growing big cities in America have in common More

Job-Seeking Bangladeshis Risk Lives to Find Work

The number of Bangladeshi migrants on smugglers’ boats bound for Southeast Asian countries has soared in the past two years More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Turkey's Main Opposition Party Hopes for Election Breakthroughi
X
May 22, 2015 10:23 AM
Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Turkey's Main Opposition Party Hopes for Election Breakthrough

Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Europe Follows US Lead in Tackling ‘Conflict Minerals’

Metals mined from conflict zones in places like the Democratic Republic of Congo are often sold by warlords to buy weapons. This week European lawmakers voted to force manufacturers to prove that their supply chains are not inadvertently fueling conflicts and human rights abuses. Henry Ridgwell reports from London.
Video

Video Class Tackles Questions of Race, Discrimination

Unrest in some U.S. cities is more than just a trending news item at Ladue Middle School in St. Louis, Missouri. As VOA’s Kane Farabaugh reports, it’s a focus of a multicultural studies class engaging students in wide-ranging discussions about racial tensions and police aggression.
Video

Video Mind-Controlled Prosthetics Are Getting Closer

Scientists and engineers are making substantial advances towards the ultimate goal in prosthetics – creation of limbs that can be controlled by the wearer’s mind. Thanks to sophisticated sensors capable of picking up the brain’s signals, an amputee in Iceland is literally bringing us one step closer to that goal. VOA’s George Putic reports.
Video

Video Afghan Economy Sinks As Foreign Troops Depart

As international troops prepare to leave Afghanistan, and many foreign aid groups follow, Afghans are grappling with how the exodus will affect the country's fragile economy. Ayesha Tanzeem reports from the Afghan capital, Kabul.
Video

Video Poverty, Ignorance Force Underage Girls Into Marriage

The recent marriage of a 17-year old Chechen girl to a local police chief who was 30 years older and already had a wife caused an outcry in Russia and beyond. The bride was reportedly forced to marry and her parents were intimidated into giving their consent. The union spotlighted yet again the plight of many underage girls in developing countries. Zlatica Hoke reports poverty, ignorance and fear are behind the practice, especially in Asia and Africa.
Video

Video South Korea Marks Gwangju Uprising Anniversary

South Korea this week marked the 35th anniversary of a protest that turned deadly. The Gwangju Uprising is credited with starting the country’s democratic revolution after it was violently quelled by South Korea’s former military rulers. But as Jason Strother reports, some observers worry that democracy has recently been eroded.
Video

Video California’s Water System Not Created To Handle Current Drought

The drought in California is moving into its fourth year. While the state's governor is mandating a reduction in urban water use, most of the water used in California is for agriculture. But both city dwellers and farmers are feeling the impact of the drought. Some experts say the state’s water system was not created to handle long periods of drought. Elizabeth Lee reports from Ventura County, an agricultural region just northwest of Los Angeles.
Video

Video How to Clone a Mammoth: The Science of De-Extinction

An international team of scientists has sequenced the complete genome of the woolly mammoth. Led by the Swedish Museum of Natural History in Stockholm, the work opens the door to recreate the huge herbivore, which last roamed the Earth 4,000 years ago. VOA’s Rosanne Skirble considers the science of de-extinction and its place on the planet
Video

Video Blind Boy Defines His Life with Music

Cole Moran was born blind. He also has cognitive delays and other birth defects. He has to learn everything by ear. Nevertheless, the 12-year-old has had an insatiable love for music since he was born. VOA’s June Soh introduces us to the young phenomenal harmonica player.

VOA Blogs