Bloomberg News

Sanctions Cost Iran $14 Billion a Year in Lost Oil Revenue

October 13, 2011

(Updates with U.S. officials’ statements after third paragraph.)

Oct. 13 (Bloomberg) -- Iran is facing a projected loss of $14 billion a year in oil revenue as a result of economic sanctions, according to the U.S. Treasury Department.

“Iran has been increasingly unable to attract foreign investment, especially in its oil fields, leading to a projected loss of $14 billion a year in oil revenues through 2016,” David Cohen, the Treasury undersecretary for terrorism and financial intelligence, said in prepared testimony before the U.S. Senate Banking Committee.

The number and quality of foreign banks willing to transact with designated Iranian financial institutions has “dropped precipitously” over the last year, Cohen said. “Iran’s shrinking access to financial services and trade finance has made it extremely difficult for Iran to pay for imports and receive payment for exports.”

Several energy traders, such as Russia’s OAO Lukoil, India’s Reliance Industries Ltd., the Netherland’s Royal Dutch Shell Plc, and Turkey’s Tupras Turkiye Petrol Rafinerileri AS, have stopped sales of refined petroleum products to Iran, according to Wendy Sherman, undersecretary of State for political affairs.

“Iran has had to redirect production facilities from valuable petrochemical export production in order to manufacture refined petroleum for domestic sale,” Sherman said in prepared testimony.

Still, Iran sells its oil to Spain, Turkey, Japan, South Korea, China and India, according to Treasury’s Cohen. Those countries buy between 7 percent and 15 percent of their oil from Iran, Cohen said.

--Editors: Terry Atlas, Steven Komarow

To contact the reporter on this story: Roxana Tiron in Washington at rtiron@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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