Members of Congress from both parties urged Obama administration officials to impose greater economic pressure to curtail Iran's nuclear ambitions and punish its human-rights violations.
Senator Robert Menendez, chairman of the Foreign Relations Committee and sponsor of several Iran sanctions laws, cited estimates that the global oil market has enough supply to let the U.S. press Iran's remaining oil buyers to radically curtail their purchases without causing a surge in gasoline prices.
"Oil markets are now and predicted to be loose for the coming year" and "it would seem that this is the time to press our allies to further reduce crude purchase from Iran," Menendez, a New Jersey Democrat, told a committee hearing yesterday on preventing Iran from acquiring a nuclear weapon.
The International Energy Agency said the Organization of Petroleum Exporting Countries' spare crude oil production capacity will increase 25 percent in the next two years as rising U.S. shale output crimps demand for OPEC's supplies.
Crude production by non-OPEC countries will increase by 990,000 barrels a day annually to 2013, according to the Paris-based IEA. West Texas Intermediate crude for June delivery settled at $94.30 a barrel on the New York Mercantile Exchange, the first advance in five days.
Menendez, who's drafting legislation to tighten sanctions on Iran, urged Undersecretary of State Wendy Sherman and Treasury Undersecretary David Cohen to pressure the six remaining importers of Iranian oil, particularly China.
Existing sanctions punishing Iran for its suspected nuclear weapons program include curbs on financial transactions and crude oil exports, the country's main source of revenue.
Sherman and Cohen testified that President Barack Obama's administration is looking at sanctions on additional sectors of Iran's economy. The U.S. is focused on Iranian "revenue, reserves and the rial," Cohen said, referring to the currency.
Iran's currency has depreciated by more than 50 percent over the past 12 months and the official inflation rate is 32 percent, Sherman told the panel. Unofficial estimates put the actual rate much higher.
The first U.S. law targeting Iranian oil sales, which went into effect in mid-2012, coupled with a European Union oil embargo that went into force at the same time, cut Iran's crude oil and condensate exports by 50 percent to about 1.3 million barrels a day by early this year, Cohen said. Iran's petrochemical exports also have been hit, dropping by at least 7.6 percent in 2012, Cohen said.
Representative Ed Royce, chairman of the House Foreign Affairs Committee, said at a hearing of his panel that sanctions must be tougher to make Iran stop development of nuclear technology.
In the Senate, Menendez expressed concern that Iran may be using its automotive industry to produce dual-use items for its nuclear program, and suggested the auto sector might be targeted for penalties, as well.
Menendez also questioned whether the administration is doing enough to enforce its own prohibitions on Iran's gold trade issued last summer.
He cited estimates in a report by the Foundation for Defense of Democracies and Roubini Global Economics that Iran has imported more than $6 billion in gold, mainly from Turkey and the United Arab Emirates, since the administration's ban on gold trade with Iran's government took effect last summer. That's equivalent to about 10 percent of Iran's 2012 oil exports of $60 billion, Menendez said.
"We are actively enforcing" the gold ban, Cohen said. "We have been very clear with countries that are exporting gold to Iran, principally Turkey and the UAE, on precisely what the law permits and what it forbids, and we are following the information very carefully." Cohen reminded lawmakers that this July 1, the ban will extend to private sales.
To date, though, the administration hasn't penalized any entity in Turkey or the UAE for trading in gold with the Iranian government.
While Iranian officials say their country's nuclear program is for energy and medical research, the U.S., its European allies and Israel say Iran may be trying to develop a nuclear weapons capability.
"We are about changing the behavior of the regime, not the regime," Sherman told the Senate committee, while saying Obama wouldn't hesitate to use force if that were the only way to stop Iran from acquiring a nuclear weapon.
The Treasury yesterday identified two companies it said were linked to Iran's efforts to evade international sanctions. Al Hilal Exchange and Al Fida International General Trading, both based in the United Arab Emirates, were designated for providing financial services to Iranian banks, the Treasury said in a statement in Washington.