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Biden Unlikely to Strictly Enforce Sanctions on Iranian Oil Ahead of Elections

Despite a new package of sanctions against Iran targeting financial institutions, ports, vessels, and refineries that knowingly process Iranian oil shipments, the U.S. Administration is unlikely to “strongly enforce” the restrictions in an election year, Amrita Sen, founder and research director of Energy Aspects, told Bloomberg Television in an interview.

“I think all sanctions are sanctions on paper, with anything that remotely causes oil prices to go up, I don't believe they will enforce it strongly,” the research analyst told Bloomberg.   

“What I really want to highlight is this is a US election year, so let’s not kid ourselves,” the analyst noted.

Moreover, China is buying most of Iran's crude oil exports, and the majority of buyers in the world’s top crude oil importer are the independent refiners, the so-called ‘teapots’ in the Shandong province, which are not connected with the U.S. financial system in any way.

Therefore, the U.S. doesn’t have any means to enforce sanctions on China’s independent refiners for buying Iranian crude oil, Energy Aspects’ Sen told Bloomberg. The teapots will continue to import Iran’s crude, while any new restrictions could take up to 500,000 barrels per day (bpd) of Iranian oil off the market, she added.

In recent months, Iran is estimated to have raised its crude oil exports to around 1.5 million bpd.

Crude oil exports from Iran hit the highest level in six years during the first quarter of the year, data from Vortexa cited by the Financial Times has shown.

The daily average over the period stood at 1.56 million barrels, almost all of which was sent to China, earning the Islamic Republic some $35 billion.

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“The Iranians have mastered the art of sanctions circumvention,” Fernando Ferreira, head of geopolitical risk service at Rapidan Energy Group, told the FT. “If the Biden administration is really going to have an impact, it has to shift the focus to China.”

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on April 22 2024 said:
    It is irrelevant whether or not President Biden decides to strictly enforce Sanctions on Iranian oil exports ahead of the presidential elections in November this year since US sanctions have failed miserably against Iran and also against both Russia and Venezuela.

    Even if he does, Iran will still be exporting on average 1.5 million barrels a day (mbd) as it has been doing since the sanctions were imposed with no sudden effect on impact on prices or global supplies.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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