The Foundation for Defense of Democracies has promoted the utility of energy sanctions as part of a comprehensive economic warfare strategy against the Iranian regime. To this end, FDD provides leading research and analysis in support of strong, broad-based energy sanctions, including gasoline, natural gas, and oil sanctions, as part of a comprehensive strategy to end the Iranian regime's pursuit of nuclear weapons, support for terrorism, and abuse of human rights. FDD also analyzes the prominent role of the Islamic Revolutionary Guard Corps (IRGC) in Iran's energy industry.

Although Iran is a major producer of crude oil, it has an economic Achilles' heel. Insufficient refinery capacity forces Iran to import up to 40% of its gasoline from abroad. In addition, as a result of existing U.S. sanctions, Iran has found it difficult to attract sufficient capital and technology to fully exploit its domestic oil and natural gas reserves.

"[Iranian President Mahmoud] Ahmadinejad has badly mismanaged the economy, and the Iranian people know it. Refined-petroleum sanctions would rock an already shaky system."
-Mark Dubowitz and Reuel Marc Gerecht, The Wall Street Journal, 2/23/2010.

The Wall Street Journal credits FDD for having "brought the idea of gasoline sanctions to political attention." Gasoline sanctions have generated broad, bipartisan support, and have been endorsed by leading editorial pages and policy experts from the across the political spectrum. Informed by FDD research and analysis, the House and Senate have both passed legislation to curtail Iran's ability to import gasoline.

The project has already achieved tangible results: Eight of Iran's major gasoline suppliers – BP, Vitol, Trafigura, Glencore, Shell, Reliance, Lukoil and Petronas – reportedly ended their gasoline supplies to Iran after calculating that the political risk from continued trade was too high. Most Western banks have stopped underwriting gasoline shipments to Iran. Two insurance companies, Munich Re and Allianz, exited the market, and a third – Lloyd's of London – indicated its willingness to stop underwriting the gasoline trade after sanctions legislation is signed into law.

FDD will continue to monitor the Iranian energy sector for new entrants into the Iranian energy trade and any signs that companies which have reportedly left the market have resumed their trade.

The focus on gasoline and other forms of energy sanctions has changed the debate in Washington. No longer a discussion over how to achieve a "grand bargain" with the Iranian regime, the debate now focuses on how to use sanctions to deter an aggressive regime dedicated to pursuing nuclear weapons, supporting terrorism, and repressing its own people.

As FDD's Mark Dubowitz notes, "the push for broad-based sanctions targeting Iran's energy sector, including steps taken to make it more difficult for Iran to import gasoline, acquire key energy technology, and attract investment for its energy sector, has already had a major impact. Not only are Iran's gasoline suppliers exiting the market, but energy investors, banks, technology providers, and insurers now face growing pressure to decide between doing business with the Iranian regime and continuing their business relationships in the lucrative U.S. market ... President Obama and Congress need to work together to sign energy sanctions legislation into law as expeditiously as possible."

Activities and Accomplishments

• 7/1/2010: President Barack Obama signs the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, enacting the toughest sanctions on Iran to date.

• 6/28/2010: French oil major Total reportedly halts its gasoline sales to Iran.

• 6/24/2010: The U.S. Congress overwhelmingly approves the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010. The House of Representatives passed the bill 408-8, hours after the Senate approved it 99-0.

• 6/9/2010: FDD publishes an article in the Hill newspapers identifying a major loophole in the Iran sanctions legislation related to Iran’s use of joint ventures to potentially evade sanctions.

• 6/9/2010: By a vote of 12 to 2 with one abstention, the UN Security Council approves new sanctions against Iran that will enable the United States, its European allies, Canada, and other nations, to pursue stronger sanction on Iran’s energy sector.

• 5/28/2010: The U.S. House approves an amendment to prohibiting the Department of Defense from awarding contracts to companies with commercial ties to Iran’s energy sector. The language was championed by Armed Services Committee Chairman Ike Skelton, Ranking Member Buck McKeon, and Rep. Ron Klein.

• 5/4/2010: Reuters reports that gasoline sales to Iran have dropped 25% over the previous month as a result of eight major energy companies reportedly leaving the market.

• 4/15/2010: Reuters reports that Malaysia's Petronas announced that it stopped selling gasoline to Iran.

• 4/07/10: Reuters reports that Russia’s Lukoil will stop supplying gasoline to Iran

• 3/23/2010: The U.S. Government Accountability Office (GAO) released a report in April 2010 on firms reported as having commercial activity in Iran's oil, gas and petrochemical sectors.

• 3/20/2010: Lukoil abandons a significant energy project in Iran.

• 3/10/2010: Royal Dutch Shell announces that it has ended gasoline sales to Iran.

• 3/8/2010: Swiss-Dutch trading companies Vitol and Trafigura, two of Iran’s leading suppliers of gasoline, reportedly bow out of the Iranian market.

• 1/27/2010: The Senate approved, by unanimous consent, the Comprehensive Iran Sanctions, Accountability, and Divestment Act (S.2799), which authorizes the president to sanction any person or entity that sells gasoline and other refined petroleum products to Iran or helps to expand Iran's refinery capacity. It also applies to the insurance, reinsurance, and shipping companies that facilitate this trade.

• 1/09/2010: Swiss-based Glencore International AG, one of the world's largest commodities traders, reported that they had stopped supplying Iran with gasoline.

• 12/12/2009: U.S. House of Representatives approved the Iran Refined Petroleum Sanctions Act (IRPSA) by a vote of 412-12.

• 10/28/2009: The House Foreign Affairs Committee marked up legislation targeting the Iranian regime's ability to import gasoline, the Iran Refined Petroleum Sanctions Act (IRPSA). IRPSA, cosponsored by more than 75% of House Members, authorizes the president to sanction any person or entity that sells gasoline and other refined petroleum products to Iran. It also allows the president to sanction insurance, reinsurance, and shipping companies that facilitate this trade.

• 10/28/2009: the Fiscal Year 2010 Energy and Water Appropriations Act, is signed into law, including an amendment to prohibit any company selling gasoline to Iran from receiving contracts to fill the Strategic Petroleum Reserve. FDD had earlier revealed that energy trader Vitol, one of Iran’s largest gasoline suppliers, had received a $50 million contract for the Strategic Petroleum Reserve.

• 10/13/2009: The House voted 414 to 6 to approve the Iran Sanctions Enabling Act of 2009, which was sponsored by House Financial Services Committee Chairman Rep. Barney Frank (D-MA) and has 257 bipartisan cosponsors. The legislation authorizes state and local governments to direct divestiture from, and prevent investment in, companies invested in Iran's energy sector. FDD testified to the Financial Services Committee in support of the legislation.

• 4/02/2009: The U.S. Senate passed, by unanimous consent, an amendment to a federal budget resolution to deny funding for federal government expenditures to companies earning revenue in Iran's energy sector, including companies providing refined petroleum products to Iran as well shipment, insurance and reinsurance services assisting in those sales.

• 2/2009: Reliance Industries Ltd. of India, did not ship gasoline to Iran after members of Congress called for an investigation of loan guarantees provided by the U.S. Export-Import Bank to help Reliance expand a refinery where it was refinining petroleum for sale to Iran. FDD had identified the $900 million in loan guarantees to Reliance as a potential source of leverage for the U.S. government.

• 12/2008: British Petroleum, ended shipments to Iran after reportedly deciding that the company's extensive North American business interests were more valuable than the Iranian market.

• 11/2008: British Petroleum, stopped its own shipments after deciding that the company's extensive North American business interests were more valuable than the Iranian market.

Resources

The following pages provide resources for understanding the issue, including work by FDD:

• Iran Energy Monitor: A weekly review of news related to Iran's energy sector, with an emphasis on refined petroleum and the IRGC.
  

• Congress Tracker: A tracker of relevant legislative actions and testimony.

• State and Local Activity: Efforts taken by State and Local government to pressure business with ties to the Iranian regime.
  

• Policy Community: A survey of cutting-edge research concerning Iran refined petroleum sanctions.

• Editorials from Leading Newspapers: A survey fo editorials concerning Iran refined petroleum sanctions.

• Broad Support for Cutting off Gasoline Sales to Iran: A survey of the Administration, Congress and Press.