US Unlikely to Enforce Iran Sanctions in Election Year: Analyst
(Bloomberg) -- The US is unlikely to strongly enforce sanctions on Iran and risk sending oil prices higher in an election year, consultant Energy Aspects Ltd. said, even after the House set new restrictions in motion against the country’s energy sector.
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Legislation passed over the weekend seeks to broaden sanctions against Iran to include foreign ports, vessels and refineries that knowingly process or ship Iranian crude in violation of existing US rules.
It would also expand secondary sanctions to cover transactions between Chinese financial institutions and restricted Iranian banks used to purchase petroleum and oil-derived products. Brent crude prices fell as much as 1.7% on Monday.
Almost all of Iran’s oil exports go to China, with most supplies going to independent refineries that are “not in the US financial system,” Amrita Sen, co-founder and director of research at Energy Aspects, said on Bloomberg Television. That makes it difficult for the US to enforce sanctions on the plants, she said.
The Islamic Republic has increased shipments over the past year, helping keep oil price rises in check amid a war in the Middle East. Looser enforcement of existing US sanctions has helped drive that supply, even though the US has denied that’s the case, Sen said.
“What I really want to highlight is this is a US election year, so let’s not kid ourselves,” Sen said. “All sanctions are sanctions on paper with anything that remotely causes all prices to go up. I just don’t see myself believing that they’re going to enforce it strongly.”
Any new restrictions, if introduced, may affect exports by between 200,000 and 500,000 barrels a day, Sen said. Iran has been exporting on average 1.2 million to 1.5 million barrels daily.
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