The Biden administration wants to keep gas prices stable ahead of the election by encouraging oil to flow into global markets. The effort has run square into another priority: being tough on adversaries Russia, Iran and Venezuela.
The policy has led to softer-than-expected sanctions on major oil producers, according to diplomats, former government officials and energy-industry players briefed by current officials.
A case in point arrived on Tuesday, when the U.S. levied fresh sanctions against Iran. The measures affect a fraction of the country’s oil exports and are unlikely to gum up global markets, analysts said.
“The president has wanted to do everything that he could to make sure that American consumers have the lowest price possible at the pump, as it affects families’ daily lives,” said a senior administration official.
Though tensions between Iran and the U.S. have ratcheted up since the Oct. 7 attacks on Israel by Tehran-backed Hamas, exports from Iran surpassed 1.5 million barrels a day this year starting in February, substantially more than at the start of the Biden presidency. Most of that oil is bought by small Chinese refineries at discounted prices.
The U.S. and its allies have been “very, very careful not to go too far and damage the ability of Western economies to function,” when it comes to sanctions, said John Smith, partner at Morrison Foerster and former head of the U.S. Treasury Department’s Office of Foreign Assets Control.
U.S. diplomats and energy officials have for decades worked around the globe to keep oil flowing, often involving uncomfortable alliances and accommodations.
When the Treasury department hit Moscow with a wave of sanctions on June 12 over the Ukraine war, it targeted banks but left the country’s oil industry largely untouched.
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