WASHINGTON - A bill that would give the Obama administration power to impose sanctions on a broad array of companies involved in providing Iran with gasoline cleared a key congressional committee on Wednesday.

The House of Representatives bill seeks to cut Iran's gasoline supplies if negotiations fail to resolve the standoff over Iran's nuclear program, which Washington fears is aimed at making a bomb.

The goal is to put pressure Iran by raising pump prices that could cripple its economy. Critics say such a step could backfire by trampling on diplomatic efforts and angering U.S. trading partners and allies.

The bill, sponsored by Representative Howard Berman and passed by the House Foreign Affairs Committee, has 330 co-sponsors. But three other House panels must approve it or waive their right to do so before it can be voted on by the full House.

A similar measure is expected to be voted on in the Senate Banking Committee on Thursday. Both chambers must agree on the same legislation before it becomes law.

Even if does, it is not clear it would be enforced. The Obama administration says it is committed to working with global partners to pressure Iran, so it could be reluctant to take unilateral steps.

Iran has some of the world's biggest oil reserves, but it imports 40 percent of its gasoline because of a lack of refining capacity. Government subsidies also help keep gasoline in Iran much cheaper than in other countries.

Berman's bill would expand a 1996 Iran sanctions law to effectively bar companies that sell refined petroleum products, including gasoline, to Iran from doing business in the United States.

The legislation includes companies that provide ships or shipping services to transport the fuel, underwrite the shipments and finance or broker gasoline cargoes. But it also allows the president to waive the sanctions if he sees fit.

Berman, the committee's chairman, said the panel was taking the first key step to ensure that President Obama is empowered with a full range of tools he needs to address the looming nuclear threat from Iran.

We have very little time to lose, he said. Should diplomacy fail, we must be prepared.


Six major powers -- Britain, France, Germany, the United States, Russia and China -- are engaged in talks with Iran in an attempt to persuade Tehran to suspend its uranium enrichment program in exchange for economic and political incentives.

If the effort to secure a negotiated solution fails, the United States and some other nations have raised the possibility of imposing additional sanctions -- either at the U.N. Security Council or unilaterally -- on Iran.

According to industry sources, oil companies that have supplied fuel to Iran in the last few months include: Royal Dutch Shell; Totsa, a unit of Total SA; Vitol, an independent company; Glencore International; Litasco, the trading arm of Russia's LUKOIL; and state-run Chinese company Zhuhai Zhenrong Corp.

Calls for tough action against Iran multiplied in Congress last month after Iran told the U.N. nuclear watchdog it was constructing a second uranium enrichment facility.

Iran says its nuclear program is for peaceful purposes like electricity generation. It recently agreed to a deal under which it would send most of low-enriched uranium abroad for processing, but says it wants major amendments in the deal.

Opponents of the bill warn that it could disrupt Obama's attempts to reach an agreement with Iran.

I am extremely concerned that moving this bill out of committee will undermine President Obama's diplomatic efforts, said Democratic Representative Barbara Lee.

The president is trying to negotiate and talk, said Republican Ron Paul, while sanctions are an act of war.

(Editing by Xavier Briand)