Obama: Oil markets can handle expanded sanctions targeting Iran

The White House, echoing a late March finding, again concluded Monday that global oil markets have enough supplies to accommodate expanded sanctions aimed at curbing exports from Iran.

“[T]here is a sufficient supply of petroleum and petroleum products from countries other than Iran to permit a significant reduction in the volume of petroleum and petroleum products purchased from Iran by or through foreign financial institutions,” Obama wrote in a memo to the secretaries of State, Energy and the Treasury.

“I will closely monitor this situation to ensure that the market can continue to accommodate a reduction in purchases of petroleum and petroleum products from Iran,” Obama wrote.

The determination is required under a fiscal 2012 defense programs law, which expanded federal efforts targeting Iran’s nuclear program. The law authorized sanctions against foreign banks that purchase Iranian oil. The toughened sanctions, which are slated to take effect as soon as June 28, are designed to reduce Iran’s oil revenues and isolate its central bank.

Reuters, citing congressional aides, reported Monday that the United States plans to exempt India, South Korea and five other countries from financial sanctions in return for cutting Iranian oil purchases. China, Iran’s top oil customer, will not be granted a waiver, according to Reuters.

White House press secretary Jay Carney, in a statement, expanded on the White House finding that the oil markets can handle more efforts to curb exports from Iran.

“Although production disruptions continue to remove some oil from the market and the international response to concerns about Iran’s nuclear activities has increased demand for non-Iranian crude oil, production increases in other countries and weaker demand growth overall have mitigated oil market tightness to a degree,” he said.

Carney also noted that “many purchasers of Iranian crude oil have already significantly reduced their purchases or announced they are in productive discussions with alternative suppliers.”

Obama’s memo notes that, when making the determination, he weighed information in a report to Congress from the federal Energy Information Administration as well as “other relevant factors, including global economic conditions, increased oil production by certain countries, the level of spare capacity, and the availability of strategic reserves.”