U.S.-Israeli relations are expected to come under further pressure during a Washington visit by a high-level delegation from the Israeli government, to include Prime Minister Benjamin Netanyahu and Defense Minister Ehud Barak next Monday.
The meeting comes shortly after the United Nations’ nuclear watchdog, the IAEA, failed to achieve notable progress in addressing concerns about what it says are possible military dimensions of Iran’s nuclear program.
It also tracks growing worries that Israel may not warn the United States about a planned attack on Iran should diplomatic efforts flounder, as CNBC reported on January 16.
In comments on Tuesday, Iran’s Foreign Minister Ali Akbar Salehi remained optimistic about the prospect of talks within the P5+1 group, comprising Russia, China, France, Britain, the United States and Germany. The country’s chief nuclear negotiator was also quoted by the Iranian News Agency as arguing the IAEA report was “proof to the fact that Iran’s nuclear program is solely for peaceful purposes”.
The positive stance was bolstered by Turkish Foreign Minister Ahmet Davutoglu, who told the Anatolia News Agency that he expected talks to resume "in a month time, in April at the latest".
But Secretary of State Hilary Clinton told the Senate Foreign Relations Committee on Tuesday that the U.S. intended “to ratchet up these sanctions as hard and fast as we can". The U.S. would follow what was going on inside Iran, she said, adding that the U.S. believed the economic pressures on the country were having an impact on decision-making there.
Iranians will be heading to the polls for parliamentary elections on March 2.
Markets are also awaiting an energy report to be delivered to Congress by the EIA, said to contain several dozen pages of data and analysis describing conditions over the past two months.
It could succeed where other organizations, such as OPEC and the IEA, have fallen short of offering extensive insight into the impact of sanctions on oil markets, and may also shed light on how lost Iranian crude could be countered by increased exports from Libya, Iraq and heavyweight Saudi Arabia.
A European Union ban on oil imports from Iran is set to take effect on July 1, with traders still unsure as to who can, and is interested, in picking up the extra oil, possibly for a discount. In a move that would help facilitate transactions, Iran’s Central Bank Governor said oil payments could also be taken in gold instead of dollars from trading partners.
India’s oil minister, whose country reported a sharp slowdown in growth on Wednesday, reaffirmed that there were no plans to cut crude purchases from Iran.
India is one of Iran’s largest crude buyers, signing on 341,000 barrels per day in the first half of 2011, according to the EIA. EU officials are understood to have tried to persuade India to use its leverage on Iran to assist the sanctions drive.
Meanwhile, the U.S. government was expected to begin extending penalties to financial institutions doing business with the Iranian Central Bank, as outlined in the initial bill signed on New Year’s Eve.
It also surfaced on Wednesday that the U.S. Treasury Department succeeded in disrupting operations of Dubai-based Noor Islamic Bank due to its role in processing Iranian oil sales.