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U.S. Congress to Vote on Further Iran Sanctions

Following the Iranian drone attack against Israel this weekend, the U.S. House of Representatives is set to vote on Monday on several bills toughening sanctions on Iran, including one aimed at reducing Chinese imports of Iranian crude oil.

The bills that will be voted on in an expedited procedure, Bloomberg notes, include the so-called Iran-China Energy Sanctions Act of 2023, which was unanimously approved by the House Financial Services Committee in November.  

The bill proposes to “impose restrictions on correspondent and payable-through accounts in the United States with respect to Chinese financial institutions that conduct transactions involving the purchase of petroleum or petroleum products from Iran.”

The bill expands secondary sanctions involving Iran “to cover all transactions between Chinese financial institutions and sanctioned Iranian banks that transact for the purchase of petroleum and petroleum products.”

Under the bill, the U.S. will also have to make an annual determination as to whether Chinese financial institutions have engaged in sanctionable conduct.

The background of the bill says that Iran’s crude oil exports are at a four-year high of 1.5 million barrels per day (bpd), 80% of which go to China’s independent refiners, the so-called teapots.

The U.S. toughening the sanctions enforcement against Iranian oil exports has been widely expected by analysts after Iran launched drones on Israel this weekend. Some investment banks and analysts do not see a major escalation in the Middle East to such that would directly hamper oil production and exports. But most expect tougher U.S. sanction enforcement against Iran’s oil exports.

China has been a major buyer of Iranian crude as it has brushed off all Western sanctions on Iranian, Russian, or Venezuelan oil exports so far.

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If sanctions against Iran are more strictly enforced, between 500,000 bpd and 1 million bpd of oil supply could be lost, according to ING analysts.

By Charles Kennedy for Oilprice.com

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  • Mamdouh Salameh on April 15 2024 said:
    So what? US sanctions against Iran have failed miserably to stop Iran exporting currently an estimated 1.5 million barrels a day (mbd) or 71% of pre-sanctions exports.

    Therefore, additional US sanctions against Iran will neither fare better than existing ones nor would imposing restrictions on Chinese financial institutions involved in the purchase of petroleum or petroleum products from Iran stop China buying Iranian crude.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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