Biden must decide between allowing Iranian oil to continue flowing or risking an increase in prices.

Biden must decide between allowing Iranian oil to continue flowing or risking an increase in prices.

The assault by Hamas on Israel is causing President Joe Biden to face pressure to restrict Iranian oil exports, potentially leading to a rise in global oil prices that could have negative political consequences.

Iran’s export of crude oil has increased during Biden’s presidency, despite the U.S. imposing sanctions in order to punish Iran for its nuclear aspirations, aggressive military actions, and support of terrorism. The recent violence carried out by a Palestinian group associated with Iran has reignited demands for the U.S. to cut off this source of revenue, which has been criticized by Republican politicians as a misguided attempt at appeasement.

The Iranian issue holds politically explosive implications for 2024, representing a stark divide between Biden and former President Donald Trump. The oil exports have also become Exhibit B in the GOP’s complaints about Biden’s handling of Iran since this weekend’s violence in Israel — alongside the administration’s decision to allow Iran access to $6 billion in frozen assets as part of a recent deal to release American prisoners.

The White House maintains that it is still implementing the economic punishments. A senior administration official, who spoke anonymously to reporters after the attack, stated, “We have placed sanctions on Iran for their support of Hamas and other terrorist groups. This will continue – trust me.”

However, experts in energy have stated that Iran’s exports have significantly grown by four to five times since 2020, with China being the primary purchaser. This rise has occurred while Biden has been attempting to alleviate conflicts with Iran, such as by working towards reinstating a previous agreement established during the Obama administration aimed at controlling Iran’s development of nuclear weapons.

Former House Speaker states that the Iranians are earning billions of dollars from their oil sales.Kevin McCarthy

Representative (R-Calif.) stated to journalists on Monday at the Capitol that individuals are using their wealth to finance acts of terrorism.

“According to former Trump national intelligence director John Ratcliffe on Fox News last weekend, the Biden administration has taken actions that support the Islamic terrorist regime in Iran. These actions include not enforcing sanctions, lifting restrictions, and allowing a 650 percent increase in Iranian oil over the past few years.”

Several members of the Republican party expressed the belief that Biden must take steps beyond implementing sanctions. Senator (insert name) also stated this viewpoint.Lindsey Graham

(R-S.C.), for instance, urged the U.S. and Israel to target Iran’s oil industry as a response to the attack by Hamas.

“I am urging the Biden administration and the Israelis to jointly come up with a plan to destroy Iran’s oil infrastructure,” Graham said during an interview with a South Carolina television station. “Without oil, they have no money. Without money, terrorism loses its biggest benefactor.”

A written message was sent on Tuesday, urging Biden to collaborate with other G-7 nations in implementing “harsh penalties” targeting Iran.

A few Democratic members have joined in advocating for stricter measures. Representative wrote, “It is imperative to support Israel by weakening Iran’s capacity to finance acts of terrorism worldwide.”Jared Moskowitz

(D-Fla.), who has supported a bill to discourage Iranian exports.

The White House has not yet provided a response to inquiries for additional input on these suggestions. However, Treasury Secretary Janet Yellen stated on Wednesday in Marrakech, Morocco, that she is open to considering any potential future actions against Iran.

No matter the method used, eliminating Iran’s daily production of millions of barrels would greatly affect the worldwide oil market, despite none of the Iranian oil being used by the United States. Last year, Iran was ranked as the eighth-largest oil producer globally, accounting for approximately 3% of the total supply. This places them below the U.S. and Saudi Arabia, but slightly ahead of Brazil and Kuwait.

Therefore, Macquarie Group, a financial services firm, stated in a note to clients on Monday that they do not anticipate Biden to impose stricter restrictions on Iranian oil shipments.

The analysts from the firm stated that the Biden administration’s strategy has been to prevent disruptions in the supply of oil, regardless of the circumstances. They also noted that even during the conflict between Russia and Ukraine, the administration did not specifically target Russian oil flows. Therefore, they predict that the export of Iranian oil will also not be restricted.

Some legislators argued that concerns about increasing fuel costs should not dissuade the United States from taking action.

I would fully support any amount of sanctions against Iran, it would be difficult for me not to.Brian Mast

The Representative from Florida stated in an interview.

Regarding the potential impact of oil prices on inflation, it appears that we have already made a mistake in that regard, according to Representative.Tim Burchett

Representative (R-Tenn.) stated, “It is important for us to demonstrate strong leadership.”

The Chair of the House Natural Resources CommitteeBruce Westerman

(R-Ark.) proposed a solution to prevent an increase in prices: “We must increase our drilling efforts domestically,” he stated in an interview with POLITICO on Wednesday.

According to the Biden administration, their efforts to engage with Iran are intended to reverse the negative impact of Trump’s actions on the 2015 international agreement designed to limit Tehran’s nuclear weapon capabilities.

In 2018, Trump terminated the nuclear deal established during Obama’s presidency, referring to it as “deteriorating and corrupt,” despite previous confirmation from his administration that Iran was abiding by it. He then imposed additional economic sanctions on the country in 2019. These penalties resulted in a significant decrease in Iran’s oil exports, reaching approximately 400,000 barrels per day in 2020 according to The Wall Street Journal (due in part to reduced demand caused by the pandemic).

During the period in which he was increasing economic sanctions, Trump disregarded concerns about how cutting off Iran’s oil supply would impact American drivers at the gas station. In a tweet from 2019 (now known as X), the former president stated, “Saudi Arabia and other OPEC members will easily compensate for the decrease in Iranian oil due to our complete sanctions.”

The sales of Iran have increased to approximately 2 million barrels per day.

According to an unnamed executive from the National Iranian Tanker Co., the state shipping company of the country, sanctions have not affected their oil shipments to China. The Wall Street Journal reported this update last month, stating that no one has interfered with the shipments.

Other politicians, including Senators, are also advocating for stricter enforcement measures, not just Republicans.Marco Rubio (R-Fla.) and Maggie Hassan (D-N.H.). are leading a bipartisan bill that would penalize anyone who assists Iranian oil exports, and Moskowitz and Rep. Mike LawlerHouse companion.

Last week, the American Israel Public Affairs Committee encouraged its supporters to push lawmakers to take action on a legislative measure, prior to the Hamas attack. AIPAC posted on X, stating, “We urge Congress to halt the funding to Iran’s regime.”

This report was contributed to by Nico Portuondo and Ben Lefebvre.