Washington (Platts)--3Jun2013/526 pm EDT/2126 GMT

The US Monday aimed new sanctions at Iran's currency and the country's automotive sector in a continuing attempt to prevent the country from obtaining a nuclear weapon.

President Barack Obama issued an executive order authorizing the imposition of sanctions on any foreign financial institutions that "knowingly conduct or facilitate significant transactions for the purchase or sale of the Iranian rial, or that maintain significant accounts outside Iran denominated in the Iranian rial."

A statement by White House Press Secretary Jay Carney notes that the rial has lost half its value since the beginning of 2012. The sanctions announced Monday, Carney said, are "the first time that trade in the rial has been targeted directly for sanctions."

The executive order opens any foreign financial institutions up for sanctions that "knowingly conducted or facilitated any significant transaction related to the purchase or sale of Iranian rials or a derivative, swap, future, forward, or other similar contract whose value is based on the exchange rate of the Iranian rial" or a financial institution that has "maintained significant funds or accounts outside the territory of Iran denominated in the Iranian rial."

The new sanctions are aimed at weakening Iran's ability to conduct financial transactions outside of the country, a senior administration official, speaking to reporters on condition of anonymity, said.

"This promises to make Iran's weak currency even weaker and more volatile," the senior official said. "The idea here is to make the rial essentially unusable outside of Iran."

The order make an exception from the rial-related sanctions for significant financial transactions conducted by a foreign financial institution for the "sale, supply, or transfer to or from Iran of natural gas."

The exception is aimed at the pipeline project to supply natural gas from the Shah Deniz gas field in Azerbaijan to Europe and Turkey, Carney said.

Iran's Naftiran Intertrade Company, or NICO, has a 10% stake in the Shah Deniz operating consortium.

"We are attempting to put pressure on their main export revenue generators and the natural gas sector is not a main export revenue generating sector," an administration official said during the conference call. "The supply of natural gas to our partners in the region remains something that is a key national security interest for us. The focus is putting pressure on those sectors that hurt the Iranian government the most, which at this point, does not include natural gas."

Providing material support for internal Iranian natural gas infrastructure remains a sanctionable activity, the official said.

The executive order broadens the categories of Iranian entities that will be cut off from receiving material support from foreign persons.

"It makes providing material support to the government of Iran sanctionable," the senior administration official said. "Previously, only material support to the Central Bank of Iran, the National Iranian Oil Company, or NIOC's oil trading arm NICO, was the focus of sanctions. Now material support to any identified government of Iran person or entity is sanctionable. This expansion will capture a vast additional array of conduct and international actors doing business with Iran."

Also sanctionable is the sale, supply, or transfer to Iran of significant goods or services used in connection with the manufacturing or assembling in Iran of light and heavy vehicles including passenger cars, trucks, buses, minibuses, pick-up trucks, and motorcycles, as well as original equipment manufacturing and after-market parts manufacturing relating to such vehicles.

While Western countries have beefed up sanctions targeting Iran's nuclear program, the Middle Eastern country has maintained the program is for electric generation, not weapons.

--Gary Gentile, gary.gentile@platts.com
--Edited by Katharine Fraser, katharine.fraser@platts.com

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