Oil report may give Obama wiggle room on Iran sanctions

Tue Feb 28, 2012 2:27pm EST
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By Timothy Gardner

WASHINGTON (Reuters) - A U.S. government report on the global oil markets due on Wednesday could help determine how tough the Obama administration will be enforcing sanctions against Iran and provide information it needs to combat rising oil prices.

The Energy Information Administration Wednesday morning will give a snapshot of global petroleum prices and production in countries besides Iran. The report, which the Obama administration pushed for, is required by the National Defense Authorization Act spelling out the Iran sanctions, signed into law two months ago.

President Barack Obama has until March 30 to decide whether the price and supply levels of non-Iranian oil and fuels like gasoline, diesel and jet fuel in global markets are satisfactory to apply sanctions on foreign banks for petroleum transactions. He must renew the decision every 180 days after that.

The sanctions aim to hurt Iran's ability to make an atomic bomb by squeezing revenues from its oil exports. Iran says its nuclear program is geared purely to develop power stations and medical devices.

An EIA source said the document that will be delivered to Congress will be about 30 pages of data and a bit of analysis that looks back at the last 60 days of oil market conditions. It could offer details on how tensions over sanctions are affecting oil markets in big Iranian consumers including China, Japan, and India.

It could also show the extent to which Saudi Arabia can plug any gaps from lost Iranian production and other supply disruptions in South Sudan, Yemen and Syria.

The report, to be updated every two months, could help the administration decide whether to grant waivers to sanction penalties if supplies are tight.

The EIA, an arm of the Department of Energy, has already received input twice from the Departments of State and Treasury and the Director of National Intelligence, which is unusual for a survey from a government department that is supposed to be independent from administration influence.   Continued...