Crs Report for Congress - Iran Sanctions (Paperback)

The principal objective of international sanctions-to compel Iran to verifiably confine its nuclear program to purely peaceful uses-has not produced that outcome to date. Since late 2011, a broad international coalition has imposed progressively strict economic sanctions on Iran's oil export lifeline, producing increasingly severe effects on Iran's economy. Many judge that Iran might soon decide it needs a nuclear compromise to produce an easing of sanctions, because the energy sector provides about 70% of Iran's government revenues. Iran's worsening economic situation is caused by: A European Union embargo on purchases of Iranian crude oil that took full effect on July 1, 2012. Previously, EU countries were buying about 20% of Iran's oil exports. This embargo is coupled with decisions by several other Iranian oil customers to substantially reduce purchases of Iranian oil in order to comply with a provision of the FY2012 National Defense Authorization Act (P.L. 112-81). Together, these sanctions have reduced Iranian oil exports to about 1.4 million barrels per day as of late August 2012, down from an average of 2.5 million barrels per day for all of 2011. This loss of sales has caused Iran to reduce oil production, to the point where it is producing less oil than is Iraq. Iran is widely assessed as unable to indefinitely sustain this level of lost oil sales, although it does have a large foreign currency reserve fund that can, at least temporarily, mitigate the impact of the lost oil revenue. Other oil producers, particularly Saudi Arabia, are selling additional oil to countries cutting Iranian oil buys, thus far preventing the lost Iranian sales from raising world oil prices.