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Iran readies for fuel sanctions

As Congress prepares to target Iran’s vital fuel imports as part of its most far-reaching sanctions package yet, observers say the Tehran government has already done much to deflect the impact of the new US measures.

world Updated: Jun 24, 2010 23:44 IST

As Congress prepares to target Iran’s vital fuel imports as part of its most far-reaching sanctions package yet, observers say the Tehran government has already done much to deflect the impact of the new US measures.

Under the pressure of earlier Western sanctions, Iran has over the past four years reduced its dependence on foreign imports of refined oil products from about 40 per cent of its domestic needs to just under 30 per cent, according to analysts.

The government is seeking to reduce that figure further by expanding its capacity to refine its own oil, experimenting with alternative fuels and cutting consumption by gradually eliminating subsidies on gasoline.

In the past six months, thanks to an elaborate rationing system, domestic gasoline consumption has dropped by nearly 20 per cent, official statistics show.

At the same time, Iran has boosted the supply available for everyday needs and built up its strategic reserves by buying refined oil products from countries such as India, Turkmenistan and the Netherlands. Government budgets show that it has spent more than $10 billion on such purchases since 2008.

“I think it’s kind of a fool’s errand to try to go after them by restricting their flow of imported gasoline,” said Flynt Leverett, a former White House expert on the Middle East at the New America Foundation. “Other companies have stepped into the breach; the Chinese have stepped up their shipments of gasoline to Iran. There is a whole network of companies in the [Persian] Gulf that are prepared to trade refined products to Iran.”

At the annual Tehran oil fair in May, hundreds of firms from Europe, Asia and South America were on hand.

Oil executives and analysts at the fair said companies with links to Iran’s powerful Revolutionary Guard Corps had taken the place of Western companies forced out of Iran by existing sanctions. Chinese representatives said sanctions had greatly expanded their business opportunities in the Islamic republic.

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