An oil tanker is seen off the port of Bandar Abbas, southern Iran
An oil tanker is seen off the port of Bandar Abbas, southern Iran in July 2012. The United States on Friday extended exemptions from sanctions designed to choke Iran's oil exports to nine major economic powers, including China, Taiwan, India and South Korea. © Atta Kenare - AFP/File
An oil tanker is seen off the port of Bandar Abbas, southern Iran
AFP
Last updated: December 8, 2012

US extends exemptions for Asian powers to Iran oil sanctions

The United States on Friday extended exemptions from sanctions designed to choke Iran's oil exports to nine major economic powers, including China, Taiwan, India and South Korea.

The Obama administration ruled that the economies concerned had taken steps to reduce imports of Iranian oil, so their financial institutions would not face measures under US law designed to punish Tehran's nuclear program.

The nine economies involved in the decision are those of China, India, Malaysia, South Korea, Singapore, South Africa, Sri Lanka, Turkey and Taiwan.

They were granted exemptions to US sanctions legislation starting in June, and President Barack Obama is bound by law to reconfirm the exemptions every six months.

The administration styles the exemptions as a sign that its effort to build pressure and isolate Iran by throttling its petrochemical sector is working as part of tough diplomacy with other world powers on the nuclear issue.

"Iran's oil production fell by one million barrels per day in September and October 2012, compared to the same period in 2011," Secretary of State Hillary Clinton said in a statement.

"This has reduced Iran's export volumes and oil revenues, which fund not only the nuclear program but its support for terror and destabilizing actions in the region.

"The message to the Iranian regime from the international community is clear: take concrete actions to satisfy the concerns of the international community through negotiations ... or face increasing isolation and pressure."

Under a law approved last year, the United States threatened to penalize foreign financial institutions over transactions with Iran's central bank, which handles sales of the country's key export.

A number of countries were angered by the US law, arguing that only the UN Security Council has the right to impose sanctions and that the reductions in oil would jeopardize an already shaky global economic recovery.

Under the determination process, Obama must conclude that the production of extra supplies by oil producing nations, global economic conditions and available spare capacity mean oil markets can bear reduced inputs from Iran.

The administration move came a week after the US Senate approved new economic sanctions aimed at further crippling Iran's energy, shipping and port sectors.

Tehran said the move contradicted US assertions that it favored talks on a nuclear program Washington says is geared to producing weapons -- a charge Iran denies.

Obama has said he prefers a negotiated solution to the nuclear standoff through a dual-approach policy of diplomacy and pressure, adopted by six major world powers engaging Tehran since 2009.

But he has refused to rule out military action. Israel says it also reserves the right to launch a multilateral strike at Iranian nuclear installations.

Talks have stalled in recent months, with the last high-level round all but failing in Moscow in June and though negotiations were expected to resume in December, there has been no announcement so far.

Several rounds of US and EU sanctions have undermined Iran's economy, exacerbating economic woes and halving all-important oil exports.

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