President Joe Biden in a cabinet meeting. November 12, 2021
US President Joe Biden said in a memo to his officials on Friday that there were sufficient supplies of oil so other countries can reduce purchases from Iran.
The White House is required to affirm every six months that there is enough oil supply globally to maintain sanctions against Iran that were put in place in 2012, during Barack Obama's administration.
Biden's memo sent to Secretaries of State, Treasury and Energy comes in advance of a virtual meeting with China's President Xi Jinping on Monday, in what is expected to be the leaders' most extensive meeting since Biden took office.
Iranian media reported Biden’s statement amid general pessimism about the outcome of the talks to restore the 2015 nuclear agreement (JCPOA) and have the US sanctions lifted. The government’s news website IRNA, however, was quick in trying to instill optimism quoting a member of parliament’s energy committee on Saturday who said exports have gradually increased in the past few months.
China is the largest purchaser of Iranian oil, averaging purchases of more than 500,000 barrels a day over the last three months.
Chinese purchases of Iranian crude have continued this year despite sanctions that, if enforced, would allow Washington to cut off those who violate them from the US economy.
The Biden administration is currently not enforcing those sanctions ahead of forthcoming negotiations with Iran to revive the JCPOA.
"Consistent with prior determinations, there is a sufficient supply of petroleum and petroleum products from countries other than Iran to permit a significant reduction in the volume of petroleum and petroleum products purchased from Iran by or through foreign financial institutions," Biden said in the memo.
Biden administration diplomatic attempts to enforce the oil sanctions by persuading China to reduce purchases remain confidential, but critics believe the administration has not acted with determination to stop the trade.
Biden’s argument about sufficient oil supplies, however, is not so strong amid prices that have exceeded $80 a barrel. As gasoline prices have been rising in the United States, there is talk this week of the government releasing supplies form the Strategic Petroleum Reserves (SPR).
Almost all of Iran’s oil to China is shipped in illicit ways, with tankers transferring oil on high seas and documents fabricated to show other sources for cargoes. But Iranian officials and government-controlled media have claimed in recent months that Iran has been successful in exporting more oil to China.
No one knows how Chinese importers pay Tehran amid US banking sanctions on Iran but the role of intermediaries in selling cargoes to China and making payments to Iran has been reported. This means Iran is not recouping the full value of its exports.
With reporting by Reuters