Iran crisis: US To Apply Fresh Oil Sanctions

US President Barack Obama has approved the introduction of fresh sanctions on buyers of Iranian oil.

Oil exports are a crucial part of the Iranian economyUS President Barack Obama has approved the introduction of fresh sanctions on buyers of Iranian oil.

Mr Obama has determined that there is enough oil in the world market to avoid negative consequences for US allies of a boycott of Iranian oil.

The move would allow the US to sanction foreign banks which are still involved in the oil trade with Iran.

Iran is facing international pressure to address concerns over its nuclear enrichment programme

Western countries suspect Iran of attempting to develop a nuclear weapon. Iran insists the programme is purely peaceful.

Mr Obama said in a statement that he would continue to monitor the global market closely to ensure it could handle a reduction of oil purchases from Iran.

The US president was required by a law he signed in December to determine by 31 March whether the market allowed countries to "significantly" cut their purchases from Iran.

'On notice'

A statement from the White House acknowledged that "a series of production disruptions in South Sudan, Syria, Yemen, Nigeria and the North Sea have removed oil from the market" in the first months of 2012.

"Nonetheless, there currently appears to be sufficient supply of non-Iranian oil to permit foreign countries to significantly reduce their import of Iranian oil," the statement says.

"In fact, many purchasers of Iranian crude oil have already reduced their purchases or announced they are in productive discussions with alternative suppliers," it adds.

Under the law signed in December, countries have until 28 June to show they have significantly reduced the amount of crude oil they purchase from Iran or face being cut off from the US financial system.

Earlier this month, the US gave exemptions from the sanctions to Japan and 10 EU countries which have reduced their imports of Iranian oil.

The new measures will put pressure on other heavy importers of Iranian oil such as South Korea, India, China, Turkey and South Africa.

"Today, we put on notice all nations that continue to import petroleum or petroleum products from Iran that they have three months to significantly reduce those purchases or risk the imposition of severe sanctions on their financial institutions," Senator Bob Menendez, who co-authored the sanctions legislation, told the Associated Press.

Turkey announced on Friday that it would be cutting oil imports from Iran by 20%.

US officials refused to speculate on the likely impact on global oil prices of the latest move, the BBC's Paul Adams in Washington reports.

Mounting pressure on Iran to make concessions over its nuclear programme has already been cited as one of the factors behind recent oil price rises, including a sharp rise in the price of petrol in the US, our correspondent adds.