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The\u00a0US House of Representatives approved a bill<\/a>\u00a0at the beginning of this month aimed at completely closing off Iranian petroleum exports. Not since President Roosevelt told Japan in July 1941 that he was going to cut it off from American petroleum has the United States threatened to use oil to strangle a country so completely. And FDR\u2019s threat caused the Japanese to decide to take Indonesia away from the Dutch, which required crippling the US Pacific Fleet at . . . Pearl Harbor.<\/p>\n The bill is intended as a slap in the face of the incoming president, Hassan Rouhani, who has pledged more cooperation with nuclear inspectors and says he will allay the anxieties of the West concerning Iranian enrichment.<\/p>\n Among the more effective lobbies for this Congressional war on Iranian oil (which is arguably an act of war in international law) is the uber-hawkish, pro-Israel\u00a0\u201cFoundation for Defense of Democracies\u201d<\/a>, the three biggest funders of which are Sheldon Adelson, Home Depot CEO Herman Marcus, and hedge fund billionaire Paul Singer, all of them also big backers of Republican politicians. In other words, the US financial blockade of Iranian petroleum is being pursued for purposes of Israeli security. Congress is attempting to punish Iran economically into mothballing its civilian nuclear enrichment program, which Israel and the US Israel lobbies maintains is aimed at producing a nuclear weapon (there is no firm evidence that Iran has a nuclear weapons program and the International Atomic Energy Agency inspectors continue to affirm that no uranium has been diverted to military uses). Israel itself is estimated to have as many as 400 nuclear warheads, as many as China, but unlike Iran, Israel does not permit IAEA inspections and it refuses to sign the Nuclear Non-Proliferation Treaty.<\/p>\n Congressional sanctions have already in the past 12 months reduced Iranian petroleum exports by half from an average of 2.2 million barrels a day last year. They succeeded by threatening importing countries with third-party US Treasury Department sanctions if they did not reduce their oil imports from Iran. (I\u2019m not sure these threats are legal under the World Trade Organization\u2019s rules).<\/p>\n There is some evidence that Congress is over-reaching and that not only is its new goal of zero Iranian petroleum exports not attainable but that Iranian exports\u00a0may rebound somewhat.<\/a>\u00a0Some of the fall in exports this year is unrelated to the US, for instance in late winter Iran was engaged in a dispute over prices with China, its number one customer. Exports\u00a0increased in July to 1.16 mn barrels a day up from 960,000 in June.<\/a><\/p>\n A further US financial blockade on Iranian oil would likely cause world gasoline prices to rise, hurting global economies and eliciting howls of outrage from American allies. In part because of the missing million barrels a day from Iran, Brent crude is around $108 \/ barrel, which is historically very high. Problems with North Sea production and oil workers strikes in Libya have taken some other production off line and raised prices. The world produces roughly 86 million barrels a day of petroleum, but the high prices suggest that it wants more than that. Some governments may be secretly buying up petroleum to increase their strategic reserves.<\/p>\n India looks\u00a0set to defy the US by increasing its imports of Iranian petroleum.<\/a>\u00a0Those imports had fallen dramatically in April and since because European insurance firms, fearful of incurring US sanctions themselves, stopped insuring Iranian petroleum exports to Indian refineries. The Indian government, however,\u00a0may step in to offer the insurance itself.\u00a0<\/a>Iran is also offering to insure.<\/p>\n