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Iran imports seen as leverage

Mar 30, 2007 4:59 PM

Iran's heavy dependence on imported gasoline is leverage for the United States but is unlikely to be targeted in the next round of nuclear-related UN sanctions, US and European officials said.

"You're right to suggest that this is a point of leverage to us," Undersecretary of State Nicholas Burns told the Senate Foreign Relations Committee, amid heightened sensitivity in the oil markets to tensions with Tehran over its nuclear programme.

Iran imports about 40 percent of its gasoline supplies. But US and European officials told Reuters there are no plans to include gasoline in a third round of UN sanctions against Iran, if that becomes necessary.

"We are not now considering such sanctions on oil or gas. We are on an incremental path at the UN and I do not believe a third resolution would include such sanctions," a senior US official said on condition of anonymity.

A European diplomat said there had been no definitive discussions yet among major powers about sanctioning gasoline and he cautioned this would be greatly complicated by the fact that much of Iran's supply comes from India.

The West accuses Iran of trying to build atomic bombs under the guise of a civilian nuclear programme, a charge Tehran denies.

Iran is OPEC's second largest oil producer but does not have enough refining capacity to meet its domestic gasoline needs. It has been an importer since 1982.

Though they haven't said so outright, US officials are clearly focusing on Iran's gasoline imports as a possible sanctions route.

"There are no free moves for Iran - everything has a consequence," US Deputy Energy Secretary Clay Sell said in an interview on Wednesday. "Their dependence on imported products is a vulnerability."

The UN Security Council on Saturday voted unanimously to impose new sanctions targeting Tehran's arms exports, but has not targeted energy supplies.

Iran imported 150,000 barrels per day of gasoline in 2005, versus total consumption of 400,000 bpd, making it the second biggest gasoline importer after the United States, according to the US Energy Information Administration.

Burns said that cheap Iranian gasoline supplies have kept demand high.

"The streets of Tehran - I have never been there - but I understand that it is impossible to drive there because there are so many cars on the road because the price of gasoline is so cheap," Burns said.

Iran's parliament this month approved the rationing of subsidised gasoline from May 22, while raising prices in moves that aim to cut costly fuel imports but could stoke inflation and arouse public criticism.