Over the weekend, as part of the $95 billion package providing funding for aiding Ukraine, Israel and Taiwan which passed by a vote of 360-58 on Saturday, the US House also passed new sanctions on Iran's oil sector set to become part of a foreign-aid package, putting the measure on track to pass the Senate within days.
The legislation, as Bloomberg reports, would broaden sanctions against Iran to include foreign ports, vessels, and refineries that knowingly process or ship Iranian crude in violation of existing US sanctions. It would also would expand so-called secondary sanctions to cover all transactions between Chinese financial institutions and sanctioned Iranian banks used to purchase petroleum and oil-derived products.
About 80% of Iran's roughly 1.5 million barrels of daily oil exports are shipped to independent refineries in China known as "teapots," according to a summary of similar legislation.
Yet while the sanctions could impact Iranian petroleum exports - and add as much as $8.40 to the price of a barrel of crude - they also include presidential waiver authorities, according to ClearView Energy Partners, a Washington-based consulting firm.
"President Joe Biden might opt to invoke these authorities, vitiating the sanctions' price impact; a second Trump Administration might not," ClearView wrote in a note to clients.
Amrita Sen, founder and research director of Energy Aspects, agreed and told Bloomberg Television in an interview that Biden's Administration is unlikely to "strongly enforce" the restrictions in an election year.
"I think all sanctions are sanctions on paper, with anything that remotely causes oil prices to go up, I don't believe they will enforce it strongly," the research analyst told Bloomberg.
"What I really want to highlight is this is a US election year, so let's not kid ourselves," the analyst noted.
By not kidding ourselves, he meant that when it comes to democratic, liberal ideals, it's all bullshit when they conflict with self-serving interests of the demented deep state puppet roaming the halls of the White House.
Moreover, China is buying most of Iran's crude oil exports, and the majority of buyers in the world's top crude oil importer are the independent refiners, the so-called 'teapots' in the Shandong province, which are not connected with the U.S. financial system in any way.
Therefore, the U.S. doesn't have any means to enforce sanctions on China's independent refiners for buying Iranian crude oil, Sen told Bloomberg. The teapots will continue to import Iran's crude, while any new restrictions could take up to 500,000 barrels per day (bpd) of Iranian oil off the market, she added.
Crude oil exports from Iran hit the highest level in six years during the first quarter of the year, data from Goldman recently showed.
The daily average over the period stood at 1.56 million barrels, almost all of which was sent to China, earning the Islamic Republic some $35 billion.
"The Iranians have mastered the art of sanctions circumvention," Fernando Ferreira, head of geopolitical risk service at Rapidan Energy Group, told the FT. "If the Biden administration is really going to have an impact, it has to shift the focus to China."
By Zerohedge.com
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Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert