US call for worldwide ban on fuel exports to Iran gains traction

Washington (Platts)--24Jan2006

The US call for instituting an international embargo on refined products
into Iran gained traction this week, with a public policy group chaired by two
key senators backing the idea.

     The Committee on the Present Danger, which is chaired by Arizona
Republican Senator Jon Kyl and Connecticut Democratic Senator Joseph
Lieberman, Monday released a policy paper seeking the embargo, as well as a
prohibition on foreign direct investment in Iran in response to Iran's
continued nuclear program.

     The group also wants to see the Iran/Libya Sanctions Act be enforced by
the US. ILSA threatens reprisals against companies that invest in Iran's oil
industry, although the US has never enforced the act despite several
high-profile investments. US oil companies are prevented from direct
investment in Iran under unilateral sanctions.    

     The group, which is also led by Reagan's Secretary of State George Shultz
and Clinton's Central Intelligence Agency director James Woolsey, also
suggests that regime change in Iran ought to be US policy and that UN
sanctions be imposed on Iran. 

     It also recommended that President Bush use the opportunity provided by
his Jan 31 State of the Union address to explain to the American people what
is at stake in Iran and what will be done to resolve the crisis.

     The idea of a worldwide ban on export of gasoline to Iran was first
floated by Senator Evan Bayh, an Indiana Democrat, who earlier this month said
he would introduce a non-binding resolution calling on the international
community to ban the export of gasoline to Iran and to enact a comprehensive
ban on arms sales to Iran.

     Iran, one the world's largest oil producers with output of 4-mil b/d and
exports about 2.4-mil b/d, imports about 180,000 b/d of gasoline at an
estimated cost of around $4-bil to $4.5-bil annually because its aging
refineries and lack of refining capacity are unable to keep pace with domestic
consumption. 

     Asian traders polled by Platts have said that such a ban would be hard to
implement since such sanctions would be nearly impossible to monitor. But if
implemented successfully, a products ban sanctions could potentially change
gasoline trade flows, causing an oversupply in Asia, leading to weaker
fundamentals, those sources said.

		--Cathy Landry, cathy_landry@platts.com

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