WASHINGTON (AP) — President Barack Obama said Friday he was plowing ahead with potential sanctions against countries that keep buying oil from Iran, including allies of the United States, in a deepening campaign to starve Iran of money for its disputed nuclear program.
The world oil market is tight but deep enough to keep the squeeze on Iran, Obama ruled.
The sanctions aim to further isolate Iran's central bank, which processes nearly all of the Iran's oil purchases, from the global economy. Obama's move clears the way for the U.S. to penalize foreign financial institutions that do oil business with Iran by barring them from having a U.S.-based affiliate or doing business here.
Obama's goal is to tighten the pressure on Iran, not allies, and already the administration exempted 10 European Union countries and Japan from the threat of sanctions because they cut their oil purchases from Iran. Other nations have about three months to significantly reduce such imports before sanctions would kick in.
Still, administration officials said that Obama is ready to slap sanctions on U.S. partners and that his action on Friday was another signal.
At issue for Obama was ruling, by Friday, whether oil supplies were sufficient to keep demanding that nations cut off Iran — not an insignificant matter in a time of high election-year gas prices at home.
Obama gave his OK after considering available reserves, increased oil production by some countries and global economic conditions. The White House emphasized that he would continue to keep an eye on the oil market to make sure that it — and its consumers — could withstand shrinking purchases out of Iran.
With oil prices already rising this year amid rising tensions over the nuclear dispute between Iran and the West, U.S. officials have sought assurances that pushing countries to stop buying from Iran would not cause a further spike in prices.
It is not year clear, at this stage of the process, how the sanctions could affect gas prices.
The U.S. sanctions are set to take effect on June 28. A European oil embargo, approved in January, starts in July.
Put together, Obama administration officials contend Iran is about to face its most severe economic pressure ever.
The United States imports no oil from Iran.
The main importers of Iranian oil that have not received exemptions from the U.S. are China, India, Turkey, South Africa and South Korea. The administration would be loath to hit a close friend like South Korea or India, or a NATO ally like Turkey, with sanctions, and is working with those countries to reduce their imports.
Turkey announced Friday it was shrinking oil imports from Iran by 20 percent, apparently bowing to pressure from the United States and the sanctions threat.
U.S. officials hope ratcheting up economic pressure will both push Iran to abandon its nuclear program and convince Israel to give sanctions time to take hold before pursuing a military strike on Iran's nuclear facilities.
The U.S. and allies believe that Iran is pursuing a nuclear bomb; Iran denies that.
Obama's diplomatic squeeze on Iran comes with strong bipartisan support from Congress, which approved the sanctions plan as part of a defense bill in December.
Sen. Robert Menendez, D-N.J., who co-authored the sanctions legislation with Republican Sen. Mark Kirk of Illinois, said he welcomed Obama's support in targeting Iran's Central Bank.
"Today, we put on notice all nations that continue to import petroleum or petroleum products from Iran that they have three months to significantly reduce those purchases or risk the imposition of severe sanctions on their financial institutions," Menendez said.
He predicted most countries would cut their purchase of oil from Iran, either out of fear of sanctions or a shared fear over the Iran's pursuit of nuclear weaponry.
The United States has not said precisely what constitutes a significant reduction in Iranian oil purchases — that is, the bar countries must meet to avoid penalties.
Administration officials said Friday they determine that on a case-by-case basis.
Domestic and foreign policy concerns have complicated the administration's decision to pursue the oil sanctions.
Oil experts testifying before a Senate panel on Thursday said tensions over Iran were already contributing to the high prices Americans were paying at the pump. And additional sanctions could drive up the price more in a tight market.
Pace reported from Burlington, Vt. Associated Press writers Matthew Lee and Dina Cappiello contributed to this report.