President Barack Obama moved Friday to tighten the economic vise on Iran over its suspect nuclear program, taking a big step toward tough new sanctions aimed at crippling the Islamic republic's ability to export oil.
Obama announced in an official memorandum that he had determined that there is enough oil on world markets to go ahead with measures designed to push countries that buy Iranian crude—including key U.S. allies like Japan, South Korea and India—to get their petroleum elsewhere.
"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," the president said in a message to Secretary of State Hillary Clinton, Treasury Secretary Timothy Geithner and Energy Secretary Steven Chu.
"I will closely monitor this situation to assure that the market can continue to accommodate a reduction in purchases of petroleum and petroleum products from Iran," Obama said.
Under a law he signed in December, the president had until Friday to make a determination about whether countries that import Iranian oil could "significantly" reduce their purchases without sowing chaos in world markets.
The law permits Obama after June 28 to effectively cut off banks still doing business with Iran from the U.S. financial system. He could also decide to exempt institutions in countries that he formally designates as having made sufficient progress on cutting imports of Iranian oil.Washington and its allies say they suspect Tehran wants to develop the ability to build a nuclear weapon. The Islamic republic, which relies on oil exports as its major source of income, denies the allegation. The president has repeatedly said that there is still time for a diplomatic end to the tense standoff over Iran's nuclear program, even as Israel has reportedly taken steps toward preparing for a military strike.
Obama's Friday decision could send already soaring gasoline prices—a political liability for him heading toward the November elections—still higher, though media reports suggest that the administration has been working with key allies like Britain and France to release emergency oil reserves to offset any major disruption in supply.