The U.S. singled out China on Monday in its effort to push the international community to apply additional economic pressure on Iran.
Since the end of last year, the U.S. has pushed countries purchasing Iranian oil to cut back and seek out alternative sources. It has even threatened the possibility of sanctions against foreign companies or financial institutions should Iran's oil partners be unable to wean themselves off Tehran's oil.
But on Monday, the U.S. government granted exemptions to India, South Korea, South Africa, Turkey, Malaysia, Sri Lanka and Taiwan. In March, the Obama administration granted waivers to 11 European nations and Japan, allowing them to continue importing Iranian oil -- albeit at much lower levels.
That now leaves China as the lone major importer of Iranian oil that has not received a waiver. The U.S. administration may begin to enact sanctions as early as June 28.
Previously, key U.S. allies like Japan, South Korea and Turkey as well as key emerging security and strategic partners like India faced the possibility of financial punishment due to their energy relations with the Islamic Republic.
All those nations have taken measures to cut back incrementally, allowing the U.S. to offer them a sanctions waiver that defers economic punishment. Some have already reduced their Iranian oil imports by as much as a fifth to a quarter over the past year. South Korea may switch to other sources entirely by July 1.
Members of Congress say the measures have already cost Tehran some $10 billion.
The European Union halted all Iranian imports in July 2011. In addition, major European shipping insurers no longer cover tankers carrying Iranian oil. That means countries importing from Iran must find some other way to take on financial liabiltiies for vessels carrying Iranian crude.
Few experts really think the U.S. government will take drastic or harshly punitive actions against China, which could damage relations and have repercussions for the global economy. Instead, many analysts consider the move as a political maneuver to highlight a tougher stance on Beijing before the U.S. elections.
Andrew Lebow, a senior vice president of energy at Jefferies Bache, a securities and investment banking group, told Reuters that No one thinks they're going to slap sanctions on China.
Beijing is not alone in being on amicable terms with Tehran. After all, Iran is the world's third-largest oil exporter, and plenty of countries, many in economically vibrant East Asia, have been eager to establish good relations.
China is Iran's largest oil importer and strategic partner, but is not as reliant on Tehran's oil as others; while 20 percent of Iranian oil exports go to China, only 10 percent of Chinese oil imports come from Iran. Iranian sources make up roughly the same percentage of oil imports for India, Iran's second-largest importer. Japan was the third-largest buyer of Iranian oil in 2011, followed by Italy, and then South Korea.
Others have taken greater risks in demonstrating an intention to cut Iranian oil. Thirty percent of Turkey's oil imports come from Iran; a quarter of South Africa's; and Sri Lanka is completely reliant on oil from the Islamic Republic.
Iran exports about 2.6 million barrels of oil per day, according to figures from the U.S. Energy Information Administration, out of the 3.5 million it produces.
The office of U.S. Secretary of State Hillary Clinton issued a statement Monday saying, We have implemented these sanctions to support our efforts to prevent Iran from acquiring a nuclear weapon and to encourage Iran to comply with its international obligations.
It added, By reducing Iran's oil sales, we are sending a decisive message to Iran's leaders: Until they take concrete actions to satisfy the concerns of the international community, they will continue to face increasing isolation and pressure.
The Chinese Foreign Ministry gave a response Tuesday, saying it consistently opposes unilateral sanctions, and could not accept the practice of using such activities to compel a third-party nation. A spokesman said China has imported oil from Iran in a transparent way.
The government said Chinese imports of Iranian oil do not violate any decisions made by the U.N. Security Council and harm no third-party nation or the international community. They are therefore completely legal and fair.
There are fears that the move to cut off Iranian oil exports could hurt the shaky global economy. The April 2012 World Economic Outlook report from the International Monetary Fund said that geopolitical risks--notably those centered on the Islamic Republic of Iran-have boosted oil prices.
The IMF expects negative trends in Iranian oil exports to be offset by increasing production from Iraq, Saudi Arabia and Libya, but cautioned that A halt of Iran's exports to Organization for Economic Cooperation and Development economies (if not offset) would likely trigger an initial oil price increase of about 20 to 30 percent, even though that increase would be alleviated over time.
While the U.S. has been clear on its policy of using economic and financial constraints to hurt Iran and force more open negotiations on nuclear issues, whether those measures will ultimately be effective to pressure the Iranian government is still being questioned.
Information released from international polling organization Gallup earlier this year suggest that economic sanctions against Iran may already be hurting average people -- or least convince them that their current economic misfortunes are due to the West.
On Feb 7, Gallup reported that almost two-thirds of Iranians saw sanctions from the United Nations, the U.S., and Europe as hurtful to their livelihoods. Twenty-seven percent said those sanctions had hurt national livelihoods a great deal and 38 percent answered that lives had been affected only somewhat.
Over the past half year, the value of the rial has plummeted due to foreign financial pressure. Forty-eight percent of those surveyed in 2012 also said there were times last year when their family lacked enough money to buy food, an increase from only 15 percent in 2005. The same percentage also said there were moments over the last year when they lacked enough money to pay for housing; less than 30 percent said the same in 2005.
China is not the only country that has not received an exemption from Washington. Singapore has also not been exempted, which led to a concerned reaction in the island nation. The Singaporean ambassador to the U.S. noted on Monday that In the past two years, Iran represented only 1 percent of Singapore's total crude oil imports. In May 2012, no Iranian crude oil was imported into Singapore.