The US's dilemma when it wants to cut off Iran's economic lifeline

Analysts say it is difficult for the US to tighten sanctions on Iranian oil after the attack on Israel, because of concerns about rising oil prices and worsening relations with China.

After Iran attacked Israel last weekend, Republican leaders in the US House of Representatives criticized President Joe Biden for not strictly implementing existing sanctions.

Responding to Fox News on April 14, Congressman Steve Scalise said that this move by the Biden administration has made it easier for Tehran to sell oil, thereby generating revenue "to use for terrorist activities".

This week, US lawmakers are expected to propose a series of bills to tighten sanctions on the Middle Eastern country.

Iran is currently the third largest oil producer in OPEC (Organization of Petroleum Exporting Countries). In 2018, former US President Donald Trump re-imposed sanctions on crude oil with this country. He withdrew the US from the JCPOA nuclear deal that Washington and Tehran reached in 2015.

The Biden administration has been trying unsuccessfully for two years to revive the JCPOA, seeking to prevent Tehran from selling its oil abroad by sanctioning companies in China, the UAE and other countries.

However, Washington in March renewed a sanction, allowing Iraq to buy energy from Iran, meaning Tehran has an additional source of revenue of 10 billion USD.

The pressure to impose sanctions on the Middle Eastern country after last weekend’s incident has put the Biden administration in a difficult position. They must think of ways to prevent similar attacks without escalating tensions in the region, halting the rise in oil prices, and hurting China – the largest buyer of Iranian oil.

Crude oil is being transferred between two oil tankers flying the flags of Iran and Liberia off the coast of Greece. Photo: Reuters — Crude oil is being transferred between two oil tankers flying the flags of Iran and Liberia off the coast of Greece. Photo: *Reuters*

For months, Washington has insisted that its primary goal is to prevent the conflict in the Gaza Strip between Hamas and Israel from spreading to the rest of the region. The main aim is to prevent the Middle Eastern country from getting involved in this.

Some analysts are skeptical that Biden will take a strong stance on tightening sanctions on Iran’s crude oil exports, which are the lifeblood of the economy .

"If the sanctions bills are passed, it will be difficult for the US government to strictly implement them," Scott Modell, CEO of Rapidan Energy Group, told Reuters.

Rapidan estimates the country’s oil exports at 1.6-1.8 million barrels a day, close to the 2 million barrels it was exporting before the sanctions, Modell said.

The potential impact on gasoline and oil prices is one of the reasons why Mr. Biden hesitated . Kimberly Donovan, an expert at the Atlantic Council, a policy consulting organization, said that the government would find it difficult to tighten sanctions after Iran's attack on Israel because it was worried that this would push up oil prices.

“Oil and gasoline prices are very important in an election year,” she said. The US presidential election will take place later this year.

A US State Department spokesman confirmed that the Biden administration has not lifted any sanctions on the Middle Eastern country and will increase pressure on the country. "Our strict sanctions remain in place," he said.

In addition, tightening sanctions could also threaten US-China relations. In fact, the relationship between the two countries has deteriorated in recent years due to a series of political, trade and technology issues. Recently, US and Chinese leaders have sought to improve this.

China is now the largest buyer of Iranian oil, with 1.11 million barrels of crude a day by 2023, according to estimates from data firm Vortexa Analytics. That would represent nearly 90% of Tehran’s exports and 10% of Beijing’s oil imports.

If Washington takes steps to reduce Iranian oil exports, it would appease Israel and prevent further escalation, but it would have to sanction major Chinese financial institutions and entities involved in the transaction.

"If the US really wants to tighten sanctions, it has to take strong action against China. But is it willing to do what the current administration has not done yet, and even Trump has not done?", a source close to the matter told Reuters .

Jon Alterman, an analyst at the Center for Strategic and International Studies (CSIS), said Washington faces many restrictions when it comes to imposing more sanctions, and those who want to circumvent the law are also very good at finding loopholes.

"I think the US will take measures to force the Middle Eastern country to bear the economic consequences. But the Biden administration will find it difficult to completely cut off the country's oil exports," he said.

Ha Thu (according to Reuters)

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