History of Iran Sanctions

On December 31, 2011, U.S. President Barack Obama tightened American sanctions on business with Iran. The sanctions are intended to deprive the Iranian nuclear program of the funding it needs to continue. While the United States has had some sort of sanction levied against Iran for most of 30 years, few of them have levered Iran into compliance with international rules regarding terrorism or nuclear energy. By early 2012, however, evidence appears to be mounting that sanctions -- both by the U.S. and its global allies -- are hurting Iran. Most of the current sanctions cut into Iran's oil exports, which account for 85% of the country's export revenue. Iran's repeated threats to close the Strait of Hormuz (itself a vital oil conduit) to international use indicates that Iran is kicking at global oil usage to relieve pressure on its own oil industry. Carter Years In November 1979, Islamic radicals captured 52 Americans at the U.S. Embassy in Tehran and held them hostage for 444 days. U.S. President Jimmy Carter tried unsuccessfully to free them, including authorizing a military rescue attempt. Iranians did not free the hostages until just after Ronald Reagan replaced Carter as president on January 20, 1981. In the midst of the crisis, in 1980, the United States broke diplomatic relations with Iran. It has never been restored. The U.S. also levied its first round of sanctions against Iran during the crisis. In 1980, Carter banned imports of Iranian oil, froze some $12 billion in Iranian assets in the U.S., and later banned all U.S. trade with and travel to Iran. The U.S. lifted the embargoes after Iran released the hostages. Sanctions Under Reagan In 1983, the Reagan Administration declared Iran a state sponsor of terrorism. As such the U.S. opposed international loans to Iran. When Iran began threatening traffic through the Persian Gulf and Strait of Hormuz in 1987, Reagan authorized naval escorts for civilian ships, and he signed a new embargo against Iranian imports. The United States also banned the sale of "dual use" items to Iran. Dual-use items are civilian goods with the possibility of military adaptation. The Clinton Years

In 1995, with Iran still labeled a state sponsor of terrorism and amid widespread fear Iran was pursuing weapons of mass destruction, President Bill Clinton expanded U.S. sanctions against Iran. He prohibited all American involvement with the Iranian petroleum industry. In 1997 he banned all American investment in Iran as well as what little U.S. trade remained with the country. Clinton also encouraged other countries to do the same. Sanctions Under George W. Bush Under President George W. Bush, the United States repeatedly froze the assets of people, groups, or businesses identified as helping Iran sponsor terrorism, destabilize Iraq, or work on weapons programs. The U.S. also froze the assets of foreign entities believed to be helping Iran in those areas. The United States under Bush also banned so-called "U-turn" financial transfers involving Iran. According to the U.S. Treasury Department, a U-turn transfer involve Iran but "originate and end with nonIranian foreign banks." Obama's Sanctions of Iran President Barack Obama has been strident with Iranian sanctions. In 2010, he banned some imports of Iranian foodstuffs and carpets. Congress also allowed Obama to tighten Iranian sanctions with the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA). Importantly, Obama can encourage non-U.S. petroleum firms to halt the sale of gasoline to Iran. Iran, which has poor refineries, imports nearly one-third of its gasoline. The CISADA can also prohibit foreign entities from using American banks if they do business with Iran. In May 2011, the Obama Administration sanctioned Venezuela's nationalized oil company for trading with Iran. Venezuela and Iran are close allies. Iranian President Mahmoud Ahmadinejad traveled to Venezuela in early January 2012 to meet with President Hugo Chavez, in part, about the sanctions. In June 2011, the Treasury Department announced new sanctions against Iran's Revolutionary Guard (already named in other sanctions), the Basij Resistance Force, and Iranian law enforcement entities. Obama ended 2011 by signing a defense funding bill that will allow the U.S. to cease dealing with financial institutions that do business with Iran's central bank. The bill's sanctions will take effect between February and June 2012. Obama has the power to waive aspects of the bill if implementation will hurt the U.S. economy. Limiting access to Iranian oil could drive up gasoline prices.

Global sanctions on Iran impact India's oil import

Sanctions by the United States and the European Union (EU) on Iran have started hitting India's oil import from the country, which stands at about 12 per cent of its total crude oil import. Citing insurance issues, the state-run Shipping Corporation of India (SCI) has declined to provide its tankers to Indian Oil Corporation (IOC) for lifting Iranian oil. IOC has now suggested India transport crude oil in tankers operated by the National Iranian Oil Corporation (NIOC). SCI, the country's largest domestic tanker-owner, has a contract with the IOC under which it is bound to provide cargo space at the desired time and for a specified freight. On January 27, IOC and SCI agreed to load an Iranian oil shipment between February 15 and 17. However, the SCI cancelled the loading as its insurance companies withdrew their cover on February 13. IOC says other shippers too were reluctant to help because of the new "180-day rule" imposed by the US. Under this, a vessel is denied berth in a US port if it enters ports in Iran, North Korea or Syria in 180 days preceding its arrival in the US.

EU sanctions on Iran have little impact on crude

NEW DELHI: International crude oil prices fell unexpectedly on Monday despite the start of European Union's sanctions against purchase of Iranian crude, as the potential drop in supplies was outweighed by concerns of falling global demand due to the economic uncertainty in Europe and the US. Brent crude fell about $2 a barrel to a little below $96 a barrel, while US crude dropped $1.4 to $83.5. Oil prices retreated after Brent's sharp rise of $6 a barrel on Friday, in anticipation of EU sanctions. Indian government and oil industry officials say that energy demands in major economies such as the US and China are low, while Europe is already facing a crisis, limiting the impact of EU's sanctions. The US and China are the top energy consumers in the world. Prices fell as data showed that unemployment in Europe rose sharply, while the US manufacturing sector slowed down in June. But chief of a private oil-refining firm said the market had reacted in the same way earlier also when there were concerns about Iranian supplies. "Similarly, when the US sanction was imposed against Iran, global crude oil fell. It seems political. Mainly to show the negligible impact of Iranian crude oil supply on international oil prices," the official said requesting anonymity. Iran is the third-largest crude oil exporter in the world after Saudi Arabia and Russia. An oil industry expert and former chief of one state-run oil firm say that any supply threat would be countered by Saudi Arabia, which will make sure there would not be any sharp rise in global crude oil rates due to sanctions. "Saudi Arabia is fearful of Iranian nuclear design as their rivalry is historic. Therefore, Saudi Arabia is willing to meet any crude oil shortfall due to Iranian sanction," the official, who did not wish to be named, said. But, former director-finance of Indian Oil, SV Narasimhan, said that global benchmarks particularly Brent has been much higher than what market fundamentals suggest. "It is surprising that Brent is higher than WTI despite European economies are in bad shape.

In fact, Brent price is abnormally high," Narasimhan said. According to RS Sharma, former chairman of ONGC, there is no rational correlation between demand-supply and crude oil prices. "In mid-2008, crude oil prices surged (to about $150/barrel) and then crashed (to $35/barrel). Thereafter, it stablised between $70 and $80 for 2009-10. It means that prices were not driven by demand supply, but by other factors such as derivative markets," he said. "Some of the main reasons for softening in prices are Eurozone crisis and dampened derivative market sentiments," said Sharma. Indian refiners do not fear any supply disruption in the near future. The US has already relaxed sanctions against India after it agreed to gradually reduce import of Iranian crude oil. India imports over 80% of crude oil it refines.