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No Rush for Iran’s Oil After Import Ban Lifted : Trade: The Administration made the change to replenish Iran’s account at the Iran-U.S. Claims Tribunal in The Hague, which is used to pay claims against Iran.

From Reuters

American oil companies were informed last month that Washington was easing a 1987 ban on trade with Iran to allow the import of Iranian crude oil, but none has bought oil as a result of the new policy, U.S. officials said Monday.

A spokesman for the U.S. Embassy confirmed a report in Platt’s Week, an oil industry newsletter, that the change authorized by President Bush was made to replenish Iran’s account at the Iran-U.S. Claims Tribunal in The Hague, which is used to pay claims against Iran.

Since the relaxation of the ban, U.S. oil firms can ask to import Iranian oil on a case-by-case basis and send payment to Iran’s escrow account at the tribunal, according to embassy spokesman Leonardo Williams. They are still barred from paying money directly to Iran.

The tribunal, set up in 1981 as part of a deal that freed 52 American hostages held at the U.S. Embassy in Tehran after the fall of the shah, arbitrates financial disputes between the two countries arising from the 1979 Iranian Revolution. So far, about $3 billion has changed hands in settlements.

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“The change in policy has not yet resulted in any payments into the escrow account,” a U.S. official said.

There is currently a world glut in heavy crude oil, Iran’s main type of oil, and companies have not seen a need to import from Iran. But oil industry experts say that if war should break out in the Persian Gulf, demand for the Iranian crude would soar.

The idea of easing the restriction to replenish the account came after Tehran paid $600 million to Amoco in June as compensation for expropriation of the company’s share in an oil field, according to an Iranian source at the tribunal.

The Amoco settlement caused funds in Iran’s escrow account to drop well below the $500 million minimum the account is supposed to hold at all times.

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Iran initially suggested that it pay in kind with oil--which was rejected outright by Washington, according to the Iranian source.

But the proposal led to a discussion of alternative ways for Iran, which is strapped for foreign currency, to replenish its account.

The new arrangement was set up at a time when the United States is anxious to have Iran, which shares a long border with Iraq, observe a U.N.-sanctioned boycott against Iraq. Washington also wants to assure as many oil supply options as possible should shortages develop as a result of the Persian Gulf crisis.


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