U.S. senator says new Iran sanctions won’t disrupt oil

Saudi Arabia has expressed “great willingness” to boost oil production to ensure potential new US sanctions on Iran don’t disrupt global petroleum markets, a key U.S. senator said Tuesday.

Republican Senator Mark Kirk, co-author of a bill aimed at cutting off Iran’s central bank from the world financial system, was addressing worries that his legislation could inadvertently send oil prices higher, lining Tehran’s pockets.

“I’ve had detailed conversations with Saudi Arabia’s ambassador to the United States, who described a great willingness by Saudi Arabia to increase production,” to remedy that potential issue, Kirk told reporters.

The senator said he and Democratic Senator Robert Menendez met with aides to President Barack Obama earlier in the day to make the case that the administration should drop its opposition to the sanctions bill.

“I don’t think that they were swayed,” according to Kirk, who said that the two lawmakers had stressed that the legislation gives the administration “considerable flexibility in handling” the imposition of sanctions.

“There are several months before action by the administration, so it gives time for diplomacy to work, it gives time for markets to adjust, and most importantly it gives time for the Saudis to increase production,” he said.

“Unless we take decisive action on sanctioning, I think what Iran is doing actually destabilizes oil markets in a more significant way,” said Kirk, who cited “the takeover of the British embassy” and new reports seen as backing Western charges that Tehran seeks nuclear weapons.

“The attainment of a nuclear weapon by Iran would destabilize world markets far more than any action of the senate,” he said. “Time is not on our side.”

World oil prices surged Tuesday after protesters stormed Britain’s embassy in Tehran, adding fuel to the already tense situation over Iran’s nuclear program.

EU nations were already expected to unveil more sanctions against Iran on Thursday, with France lobbying to place a ban on imports of oil from Iran, OPEC’s second largest producer.

“The French president is talking about a Europe-wide ban on imports from Iran – that is probably at least 450,000 barrels a day, maybe 650,000 barrels a day,” said Adam Sieminski of Deutsche Bank.

“And there is an underlying fear that the proposals for the sanctions are a last effort before a possibility of military intervention becomes more serious,” he said.