Tough U.S. and European sanctions imposed on Iran's oil industry over its nuclear program are squeezing the country's crude exports and hitting Tehran where it hurts, in the pocketbook, dropping the Islamic republic's oil output to the lowest level in 20 years.
The Energy Information Administration estimates that Iran is exporting 1.2 million to 1.8 million barrels of crude oil a day, down from an average 2.5 million barrels a day in 2011, according to a senior Obama administration official. With a European oil embargo set to take effect July 1, the channels for Iranian oil are about to constrict even further.
The Obama administration cited the progress in turning up the pressure on Iran to abandon its nuclear program in announcing Monday that it had exempted seven countries from sanctions over their Iran oil purchases after they significantly cut back their imports of Iranian oil.
The countries are India, Malaysia, South Africa, South Korea, Sri Lanka, Taiwan and Turkey. China, the leading importer of Iranian crude, and Singapore were notably absent from the exemptions.
"Today's announcement underscores the success of our sanctions implementation," Secretary of State Hillary Rodham Clinton said in a statement. "By reducing Iran's oil sales, we are sending a decisive message to Iran's leaders: Until they take concrete actions to satisfy the concerns of the international community, they will continue to face increasing isolation and pressure."
Even as Iran feels the economic pinch of the sanctions, it continues to claim that its nuclear program is for peaceful purposes rather than for developing a nuclear weapon, but U.S. and European countries want proof. Iranian officials will meet in Moscow on June 18 to discuss its nuclear program with the five permanent members of the U.N. Security Council, plus Germany representing the EU.
Ahead of those talks, Iranian President Mahmoud Ahmadinejad called on the West to explain what concessions it is willing to offer in return for halting Iran's enrichment of uranium to 20 percent purity, a level at which analysts say makes easy a shift to the production of weapons-grade uranium.
"If some want us to forgo this right, they should first give their reasons, and secondly, [say] what they will give the Iranian nation in return," he told French television in a late-May interview.
In March, the U.S. acknowledged the first group of countries — Japan and 10 European Union nations — had significantly reduced their Iranian oil purchases and qualified for an exemption under the sanctions law, meaning they won't be hit with penalties for a renewable 180-day period.
The international sanctions on foreign banks that continue to conduct business with Iran's central bank, which the Obama administration imposed over the past few months, has stanched the flow of exports out of Iran in a "steady, methodical way," an administration official told reporters on a conference call Monday.
"The fact that these countries are coming with us in reducing their reliance on Iranian oil furthers the goal of our sanctions regime and, I think, demonstrates the international unity that is so important to pressing Iran to come in line with its international obligations with respect to its nuclear program," the official said.
China is now the only major importer of Iranian oil without a U.S. waiver. It has until June 28 to wean itself from Iranian oil or face the penalties.
Even though China has yet to join the international consortium of countries agreeing to stop importing Iranian oil, one administration called China "a very important partner" in helping prevent Iran from acquiring a nuclear weapon.
"We may have different perceptions of sanctions at different times, but one of the things that has been very important is that China has agreed to this dual-track process of pressure, as well as persuasion," the official said.
Along with Russia, though, China has consistently said it will wield its U.N. Security Council veto against any authorization of military force against Iran. The need for approval from Moscow and Beijing also has forced the U.S. and Europe to water down the international economic sanctions they have sought at the U.N.
In late March, President Obama signed off on tough new sanctions hitting Iran's oil exports, after determining there is enough crude supplies in the world market that taking the step wouldn't harm U.S. allies or drive gas prices even higher.
The Obama administration is continuing to evaluate the sanctions impact on international oil prices and supplies and determined before Mrs. Clinton's Monday announcement that the embargo is not creating a problem.
"There currently appears to be sufficient supply of non-Iranian oil to permit foreign countries to significantly reduce their imports of Iranian oil, taking into account current estimates of demand, increased production by countries other than Iran, inventories of crude oil and petroleum products, and available strategic petroleum reserves," the White House said in a statement Monday.
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