WASHINGTON (Reuters) - The U.S. Congress could soon pass a bill to further squeeze Iran's oil exports - and its nuclear program - but new sanctions may fail to cut the country's crude sales much more than existing ones already have.
The Senate Banking Committee this month is expected to begin debating its version of a package of sanctions that easily passed in the House of Representatives in late July. The House bill would cut Iran's exports to global customers by an additional 1 million barrels per day in a year, on top of U.S. and European Union sanctions that have about halved Tehran's oil sales since 2011.
"Congress can pass anything it wants, but the president is not going to be able to implement it," Amy Myers Jaffe, an expert in energy and geopolitics at the University of California, Davis, said of tougher sanctions efforts.
Existing sanctions - which push countries including China, India, Japan and South Korea to reduce their imports of Iranian oil by threatening to cut their banks off from the U.S. financial system - may have already gone as far as they can without antagonizing the countries.
Oil prices on rebound
The high price of oil is not helping. Hopes that the sanctions could deliver a serious blow to Iran's nuclear program were high in June 2012 when international Brent crude prices fell below $90 a barrel, even at a time of high seasonal demand and as Washington raised pressure on Iran.
Lower prices help sanctions work by cutting the revenue Iran gets from its reduced crude oil sales. Low prices can also ease cooperation between Iran's oil-consuming countries and Washington, while higher crude prices can make it hard to crack down on oil sales from a country with enormous crude resources.
Brent oil prices are now much higher, at about $108 a barrel, though down from $117 earlier this month. Production outages in Libya, Iraq, Nigeria and other countries have cut some 3 million barrels per day, or about 3.5 percent of global demand, from the market.
Backers of tougher sanctions in the Senate say the House version waits too long - up to 90 days - to force new reductions in Iran's oil sales.
Several senators also want the new bill to require Iran's oil-consuming countries to make specific, documented reductions in their crude purchases, an aide said. The approach could require countries to cut by a certain percentage soon after the bill became law, and the percentages would rise every few months.
It would be a contrast to current practice, which only requires consuming countries to make "significant," but undefined, cuts in the purchases of Iranian crude.
Sanctions that seek further dramatic cuts to Iran's oil exports could be a "bridge too far," and one that the Obama administration is unlikely to make China, Iran's biggest oil customer, cross given the importance of Beijing's cooperation in efforts to address the Iranian nuclear issue, said Houser.
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