Why Joe Biden Won't Stop Iran's Oil Supply After Israel Attack: The China Connection
Iran's missile and drone strikes on Israel aren't likely to lead to major sanctions on Iran's oil exports by the Biden administration. Analysts believe this is due to concerns about rising oil prices and upsetting China, a top buyer of Iranian oil.
After Tehran's attack, which was in retaliation for Israel's suspected strike on the Iranian consulate in Damascus, House Republican leaders criticized President Biden for not enforcing existing measures. They plan to introduce bills to toughen sanctions on Iran this week.
Representative Steve Scalise, the No. 2 House Republican, told Fox News that the administration had made it easier for Iran to sell oil, funding what he called “terrorist activity.”
This puts pressure on the administration to punish Iran while avoiding escalating tensions, increasing oil prices, or angering China, Iran's biggest oil customer.
The US has stated it aims to prevent the Gaza conflict between Hamas and Israel from escalating into a broader regional war, which includes keeping Iran from getting involved.
However, many experts doubt that Biden will significantly increase enforcement of existing sanctions to cut off Iran's oil exports, which are vital to its economy.
“Even if these bills pass, it's hard to see the Biden administration going all out to enforce existing or new sanctions to significantly reduce Iranian oil exports,” said Scott Modell, former CIA officer and CEO of Rapidan Energy Group.
Enforcing Sanctions
Former President Donald Trump reinstated US sanctions on Iran's oil in 2018 after exiting an international deal on Iran's nuclear program. The Biden administration has tried to crack down on companies in China, the UAE, and elsewhere for evading these measures.
Despite these efforts, Rapidan Energy Group estimates that Iran is exporting 1.6 to 1.8 million barrels per day, close to the 2 million before sanctions, excluding a very light oil called condensates.
Biden, being a Democrat, might not act strongly to reduce Iran's oil exports due to concerns about gasoline prices.
Kimberly Donovan from the Atlantic Council, an expert on sanctions, mentioned that oil-related sanctions haven't been strictly enforced in recent years.
“I wouldn't expect the administration to tighten enforcement in response to Iran's attacks on Israel, mainly due to fears of increasing oil prices,” she said. “Oil prices and gas prices are crucial during an election year.”
A State Department spokesperson clarified that the Biden administration hasn't lifted any sanctions on Iran and continues to increase pressure on the country.
The China Factor
Strictly enforcing sanctions could also strain US-China relations, which both sides have been trying to mend since a tense period last year.
Most Iranian oil reaching China is labeled as coming from Malaysia or other Middle Eastern countries. It's transported by older tankers that turn off their tracking when loading in Iranian ports to avoid detection.
Vortexa Analytics estimates that China bought a record 55.6 million metric tons, or 1.11 million barrels per day, of Iranian crude last year. This amounts to about 90% of Iran's crude oil exports and 10% of China's oil imports.
Some analysts suggest that Washington might take action to reduce Iran's oil exports partly to ease Israel's potential reaction to the Iranian attacks.
“If the goal is to reduce Iran's oil exports, significant action against China would be necessary,” said one source familiar with the issue. “But would the administration really go after major banks? Would they do something even the Trump administration didn't do?”
Jon Alterman from the Center for Strategic and International Studies believes that while there may be gestures towards imposing economic consequences on Iran, a complete halt to Iranian oil may not be possible.
“I'd expect some steps towards economic consequences for Iran, but I don't think any administration can completely stop Iranian oil,” he said.
The administration could target Chinese or other entities involved in this trade instead of taking dramatic action like sanctioning a major Chinese financial institution.
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