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US Senate approves sanctions targeting Iranian oil

The US Senate has unanimously approved economic sanctions targeting Iran's crude oil industry – despite fears the move could backfire.

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In honor of International Human Rights Day, an actor from the group called "Iran 180" dresses as Santa Claus with a bomb at a political demonstration on Dec. 10, 2010, in New York. The group, demanding a 180 degree turnaround by the Iranian government in their pursuit of nuclear weapons, said they were bringing "Nuclear Winter to New York" with a 10-foot tall effigy of Iranian President Ahmadinejad. (Don Emmert/AFP/Getty Images)

The US Senate on Thursday unanimously approved economic sanctions targeting Iran's crude oil industry – amid fears the move could backfire, Bloomberg reported.

The measures, which must still be approved by the House of Representatives and President Barack Obama, would ban foreign financial institutions from doing business with the Central Bank of Iran.

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Any business that flouted the ban would be barred from having correspondent accounts in the US, Bloomberg reported.

US banks are already banned from dealing directly with the Central Bank of Iran.

The move follows earlier sanctions by the European Union that were imposed on Thursday.

The sanctions come in the form of an amendment to the 2012 defense authorization bill, which sets out Pentagon policy and spending targets. They were passed in the Senate by a vote of 100 to nil.

But the Obama administration is hesitant to go too far with sanctions, fearing that depriving global markets of Iranian exports could lead to a spike in oil prices, the BBC reported.

Undersecretary of State Wendy Sherman told the Senate Foreign Relations Committee:

“There’s absolutely a risk that, in fact, the price of oil would go up, which would mean that Iran would, in fact, have more money to fuel its nuclear ambitions, not less.”

However, the sanctions are reportedly designed to take effect in six months time, so as not to shock the oil markets.

US officials deny the sanctions are linked to Tuesday's storming of the British embassy in Iran.

http://www.globalpost.com/dispatch/news/regions/americas/united-states/111202/us-senate-sanctions-iranian-crude-oil