Iranian oil sanctions may be added to Ukrainian aid package, U.S. Senator vows

Ari Natter, Bloomberg April 17, 2024

(Bloomberg) – New sanctions on Iran’s oil may be included in a House foreign aid package that House Speaker Mike Johnson has vowed to bring to a vote this week, the top Republican on the Senate Foreign Relations Committee said Wednesday.

Senator Ben Cardin (Photographer: Al Drago/Bloomberg)

“The pot’s boiling right now,” Senator James Risch, an Idaho Republican, said in an interview. There are “discussions in the two houses to include some of those kinds of things in this package that will hopefully pass out of the House.”

Johnson has told lawmakers he plans to reveal details of the package providing aid to Ukraine and Israel later Wednesday. He said he expects to bring the measure to a vote on Saturday, though passage is far from guaranteed amid a revolt by hardline conservatives. A Johnson spokesman didn’t immediately respond to a request for comment.

The idea of placing sanctions on importers of Iranian oil has been swiftly gaining momentum in Congress following the nation’s direct attack on Israel, and House and Senate leaders have been in discussions about how to move forward with legislation to do so, Senator Ben Cardin, chair of the Senate Foreign Relations Committee, said in an interview Tuesday.

Among the options being considered is the The Stop Harboring Iranian Petroleum Act (S.1829) — which would broaden sanctions against entities that ship or process Iranian crude — passed out of the Senate Foreign Relations Committee Tuesday. The bill, by Florida Republican Senator Marco Rubio, sanctions refiners of Iranian oil and entities that illicitly trade the country’s crude through ship-to-ship transfers, according to a summary of the bill. A companion bill (H.R. 3774) passed the House on a 342-69 vote in November.

The committee also voted to approve a measure (S. 3235) by Risch taking aim at China’s evasion of sanctions on Iranian crude oil that is similar to legislation (H.R. 5923) overwhelming approved in the House Monday.

“We are talking about the process for how to move it forward,” Cardin, a Maryland Democrat, said of the bills, referring to congressional leaders and a House and Senate working group on the issue.

The House-passed bill, which was approved by a 383-11 vote, would expand secondary sanctions against Iran to cover all transactions between Chinese financial institutions and sanctioned Iranian banks used to purchase petroleum and petroleum products. About 80% of Iran’s roughly 1.5 MMbpd of oil exports are sent to independent refineries in China known as “teapots,” according to a summary of the legislation.

That legislation could increase crude prices by as much as $8.40 a bbl, which would add 20 cents per gallon for gasoline, if the sanctions were passed into law and enforced, ClearView Energy Partners said in a note to clients.

While the Iran-China legislation would likely pass if Senate Majority Leader Chuck Schumer were to bring it to the floor for a vote, Schumer may opt to stall the legislation to avoid driving up gasoline prices that are already on the rise, the consulting firm said in a note to clients Tuesday.

“However, we think it could prove politically difficult for Leader Schumer to quash Iran sanctions if the issue continues to gain momentum (especially if Iran-Israel conflict continues to escalate),” ClearView said.

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