US Iran sanctions starting to pinch

Russian companies poised to take advantage of vacuum in the market.

UNSC vote on Iran sanctions (photo credit: Associated Press)
UNSC vote on Iran sanctions
(photo credit: Associated Press)
Two weeks after US President Barack Obama signed into law stiff sanctions against Iran, officials in Jerusalem said Thursday that the American steps, as well as the EU and UN sanctions, are starting to be felt in Teheran.
The officials said that while the steps taken by some leading international companies against Iran in the wake of the sanctions have started to have an impact, it was necessary for the international community to keep up the pressure on the Iranians.
Prime Minister Binyamin Netanyahu, who has for months been saying that only sanctions against Iran’s energy sector would have an impact, said after his meeting at the White House last week with Obama that the US sanctions “actually have teeth. They bite.”
Netanyahu urged other leaders to “follow the president’s lead, and other countries to follow the US lead, to adopt much tougher sanctions against Iran, primarily those directed against its energy sector.”
Russia, however, didn’t seem to be heeding this call, with Russia’s energy minister saying Wednesday that Russian companies were ready to supply Iran with fuel.
“Russian companies are prepared to deliver oil products to Iran. The possibility of delivering oil products to Iran exists, if there is a commercial interest,” said Russian Energy Minister Sergei Shmatko.
Russia has expressed displeasure with sanctions that the US and EU passed in addition to the UN Security Council sanctions, which both Russia and China signed on to.
“Sanctions cannot hinder us,” Russian news agencies quoted Shmatko as saying after a meeting in Moscow with Iranian Petroleum Minister Massoud Mir Kazemi. According to press reports, the two signed a “road map” outlining bilaterally energy cooperation.
While the Russians and Iran were dealing with bilateral agreements, numerous international corporations have begun changing their business operations to comply with the US Iran Sanctions Legislation.
For instance, the French energy trader Total announced that it has suspended all sales of gasoline and refined petroleum products to Iran; Spain’s Repsol backed out of a contract to develop part of an Iranian natural gas field; The UK’s BP announced that it will stop providing fuel to Iranian airplanes, as jet fuel qualifies as refined petroleum; and Royal Dutch Shell reportedly will not renew its contracts to supply Iran Air with jet fuel. The company ceased providing gasoline to Iran in March.
In the insurance sphere, Lloyd’s of London – the world’s premier maritime insurance broker – announced that it would restrict insurance for any vessels shipping petroleum to Iran.
Lloyd’s General Counsel Sean McGovern was quoted Friday as saying, “The US is an important market for Lloyd’s and, in recognition of this, the market will not insure or reinsure refined petroleum going into Iran.”
Regarding banking, the United Arab Emirate’s central bank ordered financial institutions in the country to freeze accounts belonging to Iran-linked firms.
And the South Korean government, meanwhile, has stopped its export credit agency from granting export credits to South Korean companies doing business in Iran, while a large South Korean construction company – GS Engineering & Construction – suspended a $1.2 billion project to build a refinery for an Iranian natural gas field.