So far, the White House has not adopted this approach, though its position could change quickly. Any dramatic move against Iran risks intensifying a regional conflict that the Biden administration wants to calm as much as possible, and restricting Iranian oil sales could send global gas prices skyward ahead of next year’s presidential election.
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How the administration responds could hinge on what U.S. intelligence agencies ultimately conclude about Iran’s role in Hamas’s attack. U.S. officials previously told The Washington Post that Hamas received weapons and training from Iran, but produced no evidence linking Iran directly to the slaughter. Iran’s foreign minister said Monday that “preemptive action” against Israel from unspecified “leaders of the Resistance” could be expected and that “we cannot be indifferent to the war crimes committed against the people of Gaza.” All 100 senators will be briefed about the Hamas attack and Israel’s war in Gaza on Wednesday by senior administration officials.
The new letter to Biden calls on the United States to press Qatar and Turkey to “cease all ties with Hamas” and reimpose ballistic missile sanctions on Iran that were already set to expire Wednesday, in addition to reducing its revenue from oil sales to China.
“Iran must be held fully accountable for its continued role in funding Hamas and Islamic terror,” states the congressional letter, which praises Biden for his assistance to Israel thus far in the crisis. “We urge the Administration to take all necessary steps to cut off Iranian funding sources. This includes maximum enforcement of all U.S. sanctions, and taking any and all steps to end Iran’s oil trade to China.”
In a statement, the Treasury Department pointed to the nearly 1,000 sanctions the department had already imposed on individuals and entities funded by Iran and proxies such as Hamas and Hezbollah before this month’s attack.
“We will continue to take action as appropriate to counter Iran’s destabilizing activity in the region and around the world,” the statement said.
If the United States does decide to punish Iran, the country’s oil revenue would pose an obvious target. (Already, U.S. officials and the Qatari government agreed last week to suspend a $6 billion humanitarian fund for nongovernmental organizations in Iran funded by Iranian oil sales, eliciting a rebuke from Tehran.) Iran is exporting around 1.5 million barrels of oil per day — the vast majority of it to China — in a major increase from the nearly 1 million barrels it was exporting per day at the start of Biden’s term, according to Scott Modell, chief executive officer at the Rapidan Energy Group.
Restricting those sales would be difficult but possible, probably requiring the United States to impose financial penalties on the third parties — primarily Chinese firms — buying the Iranian oil. Such a move could antagonize Beijing as well as drive up the price of oil, a globally traded commodity.
The White House already faces political headwinds from rising gas prices that could threaten Biden’s reelection bid. A sanctions crackdown on Iran, if not offset by more oil from another source, could lead the price of oil to spike by more than $10 a barrel, probably bringing the average price of a gallon of gas from $3.66 to above $4, Modell said.
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“It would fly in the face of where the administration has been. The White House has wanted to keep Iranian oil flowing; they want to build on this working détente,” said Modell, who also cautioned that price fluctuations would depend on how long oil traders expect new sanctions to remain in place. “When you’re talking about taking 500,000, or 1 million, barrels per day out, the market will react to that.”
On the Senate floor Monday, top Republicans took repeated aim at the Biden administration’s approach to Tehran. The GOP has been demanding a particularly hard line: Former president Donald Trump last week falsely blamed the Hamas attack on Biden’s move to allow the $6 billion humanitarian fund, even though no money from the fund had been spent and it was limited to humanitarian purposes, with U.S. officials getting veto power over each transaction.
“We have to reestablish deterrence against the Iranian regime that not only directly threatens America’s interests in a peaceful and stable Middle East, but also bears the blood of hundreds of Americans and plots to kill even more,” Senate Minority Leader Mitch McConnell (R-Ky.) said.
Sen. Marsha Blackburn (R-Tenn.) added: “The constant refrain from the Biden administration is that there is, and I quote, ‘no direct link to Iran regarding this attack,’ end quote. It’s time for whomever wrote that talking point to turn on the news.”
Republicans, including Sen. Tom Cotton (R-Ark.), have also criticized Jack Lew, Biden’s nominee for ambassador to Israel, for the deal reached with Iran during the Obama administration, when Lew served as treasury secretary, which eased some sanctions in exchange for Iran curbing its nuclear research. The United States withdrew from the deal under Trump.
Cotton and McConnell last week introduced legislation that would permanently freeze the $6 billion in Iranian humanitarian aid. Sen. Tim Scott (R-S.C.), who is vying for the GOP presidential nomination, is pushing legislation to reauthorize the Iran Sanctions Act of 1996, which is set to expire in 2026.
Iran is under one of the most restrictive U.S. sanctions programs in the world. An almost total economic embargo prevents international firms from doing business with Iranian financial institutions or importing Iranian-origin products, among myriad other economic activities. Further restrictions are likely to face resistance from many Democrats wary of inflaming the region further.
“At this extremely delicate moment, it is in the U.S. interest to prevent the latest violence from escalating into a full-blown regional conflict,” said one senior House Democratic aide, speaking on the condition of anonymity to describe caucus dynamics. “It would be maddening if hawkish lawmakers with a long-standing goal of fomenting war with Iran succeed in pushing the U.S. into new sanctions and escalation with Iran on this totally fabricated pretext.”
Matt Duss, a former foreign policy adviser to Sen. Bernie Sanders (I-Vt.), pointed out these restrictions have failed to meaningfully change Iran’s government.
“Iran is already under the heaviest sanction of any country in the world, and has been for a long time,” said Duss, now executive vice president of the Center for International Policy, a D.C.-based think tank. “Piling more sanctions on top of sanctions does not seem to be working, especially when there is such an enormous political cost to removing sanctions when Iran does things we want to do.”
Other foreign policy experts said calls from Congress for more pressure on Iran often seem aimed at drawing attention to lawmakers rather than affecting policy.
“A lot of sanctions introduced by Congress are duplicative,” said Trita Parsi, executive vice president of the Quincy Institute for Responsible Statecraft, a foreign policy think tank, who stressed he had not yet seen the current congressional proposals. “They have no real additional impact on Iran because the items in question are already under sanction. It can make the lawmakers look like they’re doing something even if what they’re doing is not new or impactful.”
And cutting off oil sales could also prove counterproductive to the administration’s other foreign policy goals. Boosting the price of oil, for instance, could lead to tens of billions in additional revenue for Russian President Vladimir Putin as he seeks use energy sales to finance a brutal war in Ukraine.
“It could lead to a significant revenue jump for Putin, if all you do is reduce Iranian oil supply,” said Simon Johnson, an MIT economist closely tracking the Kremlin’s finances.
Still, advocates for the crackdown say they are gaining momentum. Rep. Jared Moskowitz (D-Fla.) expressed confidence that tougher sanctions on Iran would clear both chambers of Congress and Biden would sign additional sanctions into law.
“I’m concerned about any time Tehran is making money around U.S. sanctions,” Moskowitz said. “The votes will be there.”