U.S. lawmakers urge White House to seek more Iran oil cuts

Reuters News
Posted: Sep 12, 2012 7:29 PM
U.S. lawmakers urge White House to seek more Iran oil cuts

WASHINGTON (Reuters) - Two senators asked the Obama administration on Wednesday to push countries to make more cuts in Iranian oil purchases before they receive exemptions from U.S. penalties for doing business with the OPEC nation.

In a letter to Secretary of State Hillary Clinton, Senators Mark Kirk and Robert Menendez said they believed the administration should ensure oil-consuming countries have cut Iranian crude purchases by about 18 percent before the United States renews 180-day exemptions to sanctions. Kirk and Menendez were two architects of the sanctions laws.

The sanctions are designed to make it harder for Iran to fund its nuclear program, which Washington suspects is developing nuclear weapons, a charge Iran denies. Under the laws, banks in countries that buy oil from Iran cannot do business with the U.S. financial system unless they reduce the amount of Iranian oil they purchase.

This year the Obama administration granted exemptions to all of Iran's major oil buyers because they have "significantly" reduced purchases of the oil. The meaning of the word "significantly" has been subject to interpretation.

Exemptions for Japan and 10 European Union nations are up for renewal this month.

"We believe the term 'significant reduction' to mean a minimum of 18 percent in purchase reduction, whether achieved through price discounts or volume reductions, and oriented toward a complete cessation of such purchases," the senators wrote.

The roughly 18 percent level surfaced in March when the State Department exempted Japan from sanctions. The State Department's special envoy for international energy affairs estimated that Japan had cut oil purchases from Iran by about 15 to 22 percent.

The official, Carlos Pascual, indicated that decisions on exemptions were made on a country-by-country basis, and he would not say if minimum cuts were required.

A State Department spokeswoman said the agency had no comment on the letter.

Kirk and Menendez said reductions should continue to be made because the Energy Information Administration, an independent branch of the Energy Department, has found that increased production from Saudi Arabia, Iraq and Libya has partly made up for production lost in Iran due to the sanctions.

Iran's oil exports are estimated to have fallen to about 1 million barrels per day from about 2.3 million bpd a year ago as the sanctions choke the industry.

(Reporting by Timothy Gardner)