US ‘encouraged’ by Sri Lanka moves on Iran oil

Monday, 21 May 2012 00:00 - - {{hitsCtrl.values.hits}}

WASHINGTON, (Reuters): The United States is encouraged by Sri Lanka’s drive to cut its oil imports from Iran, the US State Department said on Friday in a positive assessment of the island nation’s efforts to escape potential US sanctions.

Sri Lanka’s oil minister, Susil Premajayantha, said his government expected to avoid US sanctions after cutting Iran oil imports by up to 38 per cent by switching to alternatives from Oman and Saudi Arabia.

Premajayantha said Sri Lanka had reduced Iran crude purchases to eight cargoes a year from 13, buying four cargoes from Oman and one from Saudi Aramco.

“We are encouraged by the steps that Sri Lanka has taken,” State Department spokeswoman Victoria Nuland said after Secretary of State Hillary Clinton met visiting Sri Lankan External Affairs Minister G.L. Peiris.

The US has tightened sanctions due to Iran’s failure to answer questions about its nuclear program, which Washington and its allies suspect is a cover to develop nuclear weapons. Iran rejects the Western accusations and says its program is solely for peaceful energy purposes.

In March, the US granted exemptions to Japan and 10 European Union nations, giving banks in those countries a six-month reprieve from financial sanctions.

Banks in countries that do not significantly cut imports of Iranian oil could find themselves cut off from the US financial system at the end of June, six months after President Barack Obama signed the new sanctions into law.

US officials are still discussing the issue with other customers of Iranian crude, including its top two customers, China and India, as well as US allies South Korea and Turkey.