Secretary of State Hillary Clinton said Iran will face increasing pressure from economic sanctions aimed at its disputed nuclear program.
“The pressure track is our primary focus now, and we believe that the economic sanctions are bringing Iran to the table,” Clinton said in an interview with Bloomberg Radio in Geneva on June 30. “They are going to continue to increase and cause economic difficulties for them.”
Three rounds of international talks since April have failed to achieve a deal to satisfy international concern that Iran is seeking the capability to build nuclear weapons. Those skeptical about sanctions, such as Trita Parsi, president of the National Iranian American Council, have questioned whether they are effective in compelling regimes such as Iran’s to compromise. They say in some cases economic penalties have strengthened hardline factions.
Iran says its atomic program is for civilian energy and medical research.
A European Union embargo on Iranian oil imports took full effect yesterday, three days after U.S. financial sanctions on payments for Iranian oil.
Under a U.S. law enacted Dec. 31, foreign financial institutions that settle oil trades with Iran’s central bank would be cut off from the U.S. banking system. Clinton has granted exemptions from sanctions to 20 nations that imported Iranian crude, including China, India and Japan, finding they have “significantly reduced” their purchases.
The EU agreed in January to ban oil imports from Iran, offering a five-month phase-in period for existing contracts to let member states such as Greece find alternative supplies. An exemption on tanker insurance restrictions for the worldwide shipping industry also ran out yesterday.
Oil fell today after the Institute for Supply Management reported that manufacturing in the U.S. contracted in June for the first time in almost three years.
Crude for August delivery dropped $2.51, or 3 percent, to $82.45 a barrel at 12:03 p.m. on the New York Mercantile Exchange. Prices climbed $7.27 on June 29 to $84.96. The percentage gain was the biggest since March 12, 2009. Oil is down 17 percent this year.
Brent oil for August settlement on the London-based ICE Futures Europe exchange fell $2, or 2 percent, to $95.80 a barrel.
Futures pared losses earlier after Jam-e-Jam, a Tehran- based news organization, reported that a member of the Iranian parliament said he was working on legislation to block oil tankers from passing through the Strait of Hormuz, the transit point for about 20 percent of globally traded oil, in retaliation for international oil sanctions.
Iran, which depends on oil for more than half of its government revenue, is losing billions of dollars from lost oil sales, Clinton said last week. Iran’s oil exports this year have plummeted to between 1.2 million and 1.8 million barrels a day, down from 2.5 million barrels a day last year, according to the International Energy Agency in Paris.
Oil importers now could circumvent the U.S. sanctions on petroleum transactions with Iran’s central bank by finding alternate ways to settle oil trades or using financial institutions that have little or no exposure to the U.S. banking system. Discussions in the administration and Congress are aimed at tightening those loopholes.