US could be in a difficult position if it tightens sanctions on Iran's oil exports

Analysts say the US is unlikely to tighten sanctions on Iran's oil exports, the country's economic lifeline, after last weekend's attack on Israel due to concerns about rising oil prices and avoiding backlash from major buyers of Iranian oil.

Rapidan Energy Group CEO Scott Modell said that if the sanctions bills are passed, it will be difficult for the US government to strictly enforce them.

In 2018, former US President Donald Trump reimposed sanctions on Iranian crude oil. He withdrew the US from the nuclear deal, officially known as the Joint Comprehensive Plan of Action (JCPOA), that the US and Iran reached in 2015.

President Joe Biden's administration has made it harder for Iran to circumvent the law to sell oil abroad by sanctioning businesses that buy Iranian oil.

Rapidan estimates Iran's oil exports at around 1.6-1.8 million barrels per day.

That’s close to the 2 million barrels per day Iran was pumping before sanctions were imposed. The potential impact on gasoline and oil prices is one reason Biden is hesitant to tighten sanctions on Iran.

Kimberly Donovan, an expert on anti-money laundering and sanctions at the Atlantic Council, a policy think tank, said the US government would find it difficult to tighten sanctions after the incident between Iran and Israel last weekend because of concerns that this would drive up oil prices.

In addition, tightening sanctions could also threaten US-China relations.

In fact, relations between the two countries have been strained over the past few years due to a series of political, trade and technological issues. Recently, the leaders of both countries have been looking for ways to improve bilateral relations.

China is now the largest buyer of Iranian oil, with 1.11 million barrels of crude per day by 2023, according to estimates from data firm Vortexa Analytics.

This figure is equivalent to nearly 90% of Iran's exports and 10% of China's oil imports.

Jon Alterman, a Middle East analyst at the Center for Strategic and International Studies, said the US government has limitations in imposing sanctions on Iran and cannot completely cut off the country's oil exports.