New Iran oil sanctions passed by US House in foreign aid package

The US House passed new sanctions on Iran’s oil sector set to become part of a foreign-aid package, putting the measure on track to pass the Senate within days.

The legislation would broaden sanctions against Iran to include foreign ports, vessels, and refineries that knowingly process or ship Iranian crude in violation of existing US sanctions. It would also would expand so-called secondary sanctions to cover all transactions between Chinese financial institutions and sanctioned Iranian banks used to purchase petroleum and oil-derived products. 

The legislation, which is set to be included in a $95 billion package providing funding for aiding Ukraine, Israel and Taiwan, passed by a vote of 360-58 on Saturday. It was pre-negotiated with Senate Majority Leader Chuck Schumer, and the White House said it supports it.

About 80% of Iran’s roughly 1.5 million barrels of daily oil exports are shipped to independent refineries in China known as “teapots,” according to a summary of similar legislation.

While the sanctions could impact Iranian petroleum exports — and add as much as $8.40 to the price of a barrel of crude — they also include presidential waiver authorities, according to ClearView Energy Partners, a Washington-based consulting firm.

“President Joe Biden might opt to invoke these authorities, vitiating the sanctions’ price impact; a second Trump Administration might not,” ClearView wrote in a note to clients.

US Treasury Secretary Janet Yellen in October rejected a widely-held notion that the US had gradually relaxed some sanctions enforcement on Iranian oil sales as part of efforts for a diplomatic rapprochement.