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US Considers Choking Off Iran's Oil Exports To China Amid Stalled Nuclear Talks

The United States is considering clamping down on Iran's rising oil exports to China as a tool to either force Tehran to conclude a nuclear deal or punish it if it does not, The Wall Street Journal reported on Monday, quoting U.S. officials and sources with knowledge of the plans.

The nuclear talks in Vienna, aimed at bringing the United States and Iran back to the so-called nuclear deal, have been going on for months now. Talks are currently adjourned, until Iran's new president Ebrahim Raisi takes over. This is expected to occur at some point in early August.

Iran's Deputy Foreign Minister, Seyed Abbas Araghchi, tweeted on Saturday that the Vienna talks "must thus obviously await our new administration," that is the inauguration of President-elect Raisi, who is seen as a hardliner.

"As I've made very clear, the United States is prepared to resume indirect talks with Iran, to resume that seventh round of negotiations. We are ready to go if and when the Iranians signal they are as well," U.S. State Department Spokesperson Ned Price said last week, but noted that "this process is not indefinite."

According to the Journal's sources, the U.S. is now considering options to choke off Iran's key remaining revenue stream from oil sales—those to China, its single biggest oil customer and actually the only customer that currently dares skirt existing American sanctions on Iranian oil exports.

The U.S. mulls over targeting the shipping networks assisting Iran to sell its oil to China, U.S. officials told the Journal.

These sales have been rising in recent months and could be as highs as 1 million barrels per day (bpd).

No decision regarding such sanctions has been made yet, and there is concern that such a move could anger Tehran and further motivate it to pursue its nuclear enrichment program, according to the WSJ.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on July 19 2021 said:
    This is easy said than done. China who never stopped buying Iranian crude despite US sanctions against Iran will use its own tankers to bring discounted Iranian crude shipments to Chinese ports. Is the United States going to intercept them? I don’t think so. Is it going to sanction shipping Chinese companies? China doesn’t care less. Furthermore, it will retaliate.

    Alternatively, Iranian tankers could carry the oil to China. If The United States tries to intercept them, Iran would block the Strait of Hormuze encouraged by the fact that it could continue to export its oil via its Goreh-Jask oil pipeline that bypasses the Strait altogether.

    Without the United States agreeing first to lift the sanctions, Iran won’t even negotiate with the Biden administration. On the other hand, the United States won’t lift the sanctions without Iran accepting limitations on its nuclear and ballistic missile development programmes which Iran will never do and therein lies the problem.

    A lifting of US sanctions won’t see the light of day even by 2023 or ever. The reason is that the positions of the United States and Iran are irreconcilable.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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