Feeling the Heat from New Sanctions, Iran Threatens U.S. Navy

Feeling the toll on its economy from sanctions imposed by the U.S. and EU, Iran released a threat to take action against the U.S. Navy if an aircraft carrier is moved into the Gulf.

After sanctions targeting the nation’s oil sector were imposed, Iran’s currency has fallen 40 percent against the dollar in the past month.

Last week the U.S. Navy moved the USS John C Stennis, an aircraft carrier, out of the Persian Gulf because of Iran’s naval exercises. Iran says they will take action if the ship returns.

Iranian Army Chief Ataollah Saleh said Iran will not repeat its warning and recommended the U.S. not return the carrier to the Gulf. Tehran’s state run new agency reported that an Iranian warplane identified a U.S. carrier in the area of Iran’s drills.

The U.S. Navy’s 5th fleet, which the John C Stennis is a part of, had no comment on the threat. Iran’s naval drills, which included the firing of missiles in the Strait of Hormuz, concluded on Monday evening.

The increasingly tighter sanctions have been imposed over Iran’s nuclear program, which the country claims is peaceful. The West however believes the unstable country has aims to build an atomic bomb. For years, sanctions have been imposed, but these latest sanctions target Iran’s oil trade, a sector responsible for 60 percent of its economy.
On Saturday, President Obama signed additional sanctions that would cut off the financial institutions that work with Iran’s central bank from the U.S. financial system – blocking the main path for payment for Iranian oil. The EU is also expected to impose new sanctions before the end of the month – possibly banning oil imports.

Iran said Tuesday that U.S. sanctions aimed at its Central Bank are not to blame for the steep depreciation of its currency. On Monday, Iran’s riyals fell 13 percent to a new record low, reaching 18,000 riyals to one dollar.

China, who has refused to back the global sanctions against Iran, is now demanding discounts for Iranian oil as the country’s options for buyers becomes limited. Beijing has cut imports from Iran by more than half for January and has paid premium prices for oil from Russia and Vietnam instead.

Last week Iran announced that they would stop shipping in the Strait of Hormuz if oil exports were targeted by sanctions. If successful this sanction would disrupt the movement of 40 percent of the world’s oil. The U.S. Navy’s 5th fleet spokesperson responded to this threat, saying that disruptions would not be tolerated.

If fully imposed, the new U.S. sanctions would make it impossible for refineries to pay Iran for crude. Waivers included in the plan would allow Obama to avoid an oil price spike.

EU member states are meeting again this week and expect to agree on new steps for sanctions by the end of the month. French President, Nicholas Sarkozy, has expressed his desire to impose tougher sanctions with two proposals – one to freeze the Iranian central bank assets, and the other to embargo Iranian oil exports.