Oil priced at around $100 per barrel means Iran for May was out around $300 million in oil revenue because of Western economic sanctions. A U.S. Treasury Department official said sanctions are taking a slice out of oil revenue for the Islamic republic after years of pressure and May exports of oil from Iran may be at record lows. Sanctions are meant to starve Iran of the finances it needs to support its nuclear research. Following a damning report from the IAEA, the country may find itself with its back against the wall unless it changes course and fast.
Crude oil shipments from Iran declined in May to around 700,000 barrels per day, which may be the lowest level in decades. Assuming a price per barrel of around $100, Iran lost more than $300 million in oil export revenue from April to May. April exports were already hit when Japan announced it almost completely stopped purchasing Iranian crude.
Economic sanctions are used by Iran’s adversaries to cut off the funding that may be financing Iran’s nuclear program. The Iranian government maintains the right to peaceful nuclear research as a party to the Nuclear Non-Proliferation Treaty. The International Atomic Energy Agency said this week that, unless Iran allows effective verification of its intent, it’s not possible to resolve outstanding issues “including those relating to possible military dimensions to Iran’s nuclear program.”
U.S. Under Secretary for Terrorism and Financial Intelligence David Cohen told the Senate Committee on Banking, Housing and Urban Affairs the “scope, intensity, and impact” of sanctions on Iran have expanded. This week alone, the U.S. government targeted Iran’s currency, the rial, and the foreignassets of its leaders. Sanctions, said Cohen, have inflected significant damage on the Iranian regime. He said laws restricting Iranian oil sales have cost Iran billions of dollars a month since last year. Coupled with sanctions from the European Union, Cohen said crude oil exports from Iran were down more than 1 million barrels per day year-on-year.
“U.S. and EU sanctions on Iran’s petroleum sector have been particularly powerful,” he testified.
The International Monetary Fund said it expects the Iranian gross domestic product to contract by 1.3 percent in 2013, highlighting the country’s overall economic woes. The eight candidates approved to run in a presidential election June 14 have put economic policies at the top of their agenda. Iranian presidential candidate and top nuclear negotiator Saeed Jalili said this week that Iran “will not retreat one iota” from the right to pursue nuclear technology, however. According to Cohen, that amounts to nothing more than another nail in the coffin for the Iranian regime.
“The (Obama) administration’s campaign to target Iran’s proliferation networks, support for terrorism, sanctions evasion, abuse of human rights, and complicit financial institutions is without precedent,” he said. “It will only continue and grow more robust as Iran’s failure to meet its international obligations persists.”
This piece is cross-posted from Oil Price.com with permission.