(Repeats to additional subscribers)
* Saudi pumps more as Europe, China economy weakens
* Lower oil prices make it easier to apply sanctions
* Congress working to finalize next package in July
By Timothy Gardner and Roberta Rampton
WASHINGTON, June 27 For most of this year, the
threat of tough U.S. sanctions on Iran, the world's
third-largest oil exporter, helped push crude oil prices higher
and higher, adding a menacing headwind for struggling global
But in the past few weeks, a combination of higher output
from Iran's rival Saudi Arabia and economic troubles in China
and Europe have pushed oil prices down 25
percent, putting the threat of sanctions back squarely on Iran.
As June 28 approaches - the day the law allows U.S.
President Barack Obama to enforce sanctions on countries that do
oil deals with Iran's central bank - Washington is revving up
efforts to tighten the squeeze on Tehran.
Lawmakers in Congress hope to finalize in July a new package
of sanctions aimed at further crippling Iran's oil revenues
after international talks in Moscow last week failed to convince
Tehran to scale back its nuclear program.
"Thanks to Saudi production increases and the slump in
Europe, it appears that we can have our cake and eat it too,"
said Suzanne Maloney, a senior fellow at the Brookings
Institution's Saban Center for Middle East Policy.
"We can exact a painful price on Tehran for its
recalcitrance and avoid any blowback to our own economy, at
least in the near term," Maloney said.
Countries in the West believe Iran is working on building
nuclear weapons, while Tehran has maintained its nuclear program
is strictly for civilian purposes.
Iran's oil exports have fallen as much as 1 million barrels
per day, worth about $90 million as the sanctions and an EU
embargo starting July 1 push its crude customers to seek
alternatives, according to industry sources.
Iran, OPEC's second-largest oil exporter, has a reserve fund
of $80 billion to $100 billion that can shield its leaders from
the drop in revenues, analysts say, but that cushion only pushes
sanctions backers to turn up the pressure.
"Enough is enough. It's time to fully implement crippling
sanctions on Iran," said Howard Berman, the top Democrat on the
House Foreign Affairs Committee.
"We must finish the process of cutting off Iran's access to
the global financial system, close loopholes in sanctions on the
Central Bank of Iran, and tighten the screws on the Islamic
Revolutionary Guard Corps and the regime's energy and shipping
industries," Berman said.
NEXT UP: MORE SANCTIONS
Congress wants the White House to push even harder on Iran.
Last December, before Obama had even signed off on the banking
and oil sanctions, the House of Representatives had already
passed two more bills with additional punitive measures to close
what lawmakers see as a laundry list of glaring loopholes.
The Senate followed, finally passing its version of the bill
in May. The sanctions are designed to crack down on transactions
with Iran's national oil and tanker companies, and hamper
Iranian banks' ability to transfer funds electronically.
"House and Senate stakeholders are meeting now and comparing
preliminary drafts of a final sanctions law," a congressional
To quickly sort out the differences between the two
versions, the bill may be ping-ponged "between the chambers"
rather than negotiated through a more formal conference process.
"We're trying to see if we can get the House either to
largely accept what we put through, or to come to what would be
a quick staff conference that would lead us to a final
conclusion that we could ratify," said Democratic Senator Robert
Menendez, who helped craft the Iran sanctions package.
Some lawmakers want to add provisions to address loopholes
they believe may allow Iran to move money through accounts held
by others, including from energy companies.
Also in play is a proposed U.S. ban on insurance to oil
cargoes, except for those countries that have received
exemptions allowing them to continue a lower level of imports.
Menendez said "one or two" new measures may be added, but
said he favored quickly moving the existing bill.
"While there's things I'd like to see, I'd be happy to
impress upon the Iranians that we're going to continue to
ratchet up the consequences," Menendez said.
Obama also has opportunities to crank up the pressure. His
administration has granted exemptions to the sanctions to every
major buyer of Iran's oil but China. Japan, for instance, got an
exemption for cutting purchases for about 20 percent.
In coming months, the administration could push buyers to
cut purchases even more, because the sanctions law requires it
to update the waivers every 180 days, said Kenneth Katzman, a
Persian Gulf expert at the Congressional Research Service.
But to do that, Washington may need Saudi Arabia to keep
production near current levels, the highest in decades. And that
is no sure thing, given weakening prices. "This probably cannot
go on indefinitely," said Brookings' Maloney.
(Edited by Russ Blinch and Lisa Shumaker)