The United States and Israel are discussing the feasibility of curbing Iran's imports of gasoline and other refined oil products if Tehran refuses to enter negotiations over its nuclear program, an Israeli official said on Monday.
US officials refused to say whether they were considering such a curb, which would represent a critical escalation of existing sanctions against the Islamic state and would hit the average Iranian hard in the pocket book.
But the Israeli official, speaking on condition of anonymity, said a possible gasoline import ban "has been discussed for a long time" between the allies, but that policymakers in Washington were concerned Tehran's response could have implications for global oil markets.
Tehran has threatened to retaliate against a cutoff of its gasoline imports by stopping its crude oil exports to Western countries. Iran could also disrupt oil tanker traffic through the Strait of Hormuz. About 17 million barrels of oil a day pass through the strait.
President Barack Obama has given Tehran a deadline of September to agree to international talks about its uranium enrichment program. Israel and Western powers fear Iran is pursuing nuclear weapons while Tehran says the program is intended to generate electricity.
Iran has the world's third largest proven oil reserves but still imports 40 percent of its gasoline to meet growing demand because of limited refining capacity.
The White House and State Department on Monday would not comment on whether a gasoline import ban was an option under discussion with Israel and European allies.
"With respect to the potential actions that might be undertaken by the international community (against Iran), we're not going to be commenting on what might or might not be done," said US Secretary of State Hillary Clinton.
"So we're not prepared to talk about any specific steps. But I have said repeatedly, in the absence of some positive response from the Iranian government, the international community will consult about next steps and certainly next steps can include certain sanctions," she added.
Obama said during the US presidential campaign last year that his administration would tighten sanctions on Iran and restrict gasoline imports, if necessary.
"If we can prevent them from importing the gasoline they need and the refined petroleum products, that starts changing their cost benefits analysis, that starts putting the squeeze on them," Obama said at a presidential debate last October.
'No realistic chance of another round of sanctions'
White House spokesman Robert Gibbs said the United States would consult with its allies in September. "But I don't want to get into discussions amongst allies or hypotheticals as we get toward those dates," Gibbs told reporters on Monday.
Obama could use next month's G20 summit of industrial nations in Pittsburgh to press for a united front against Iran, but diplomats said Obama could have a hard time convincing Russia and China to go along with any fuel sanctions on Iran.
"China and Russia have made clear to us that they will not accept new sanctions at the moment," said a senior diplomat from one of the six countries that has offered Iran economic and political incentives in exchange for a suspension of Iran's nuclear enrichment program.
"I don't see that there is any realistic chance of getting another round of sanctions -- especially measures that would hit Iran's oil industry -- through the Security Council anytime soon," the diplomat told Reuters.
Russia and China, like the United States, Britain and France, are permanent veto-wielding Council members.
Other UN diplomats noted that the 27-nation European Union is split on the idea of targeting Iran's energy industry, which would make it difficult for the five European members of the Security Council to come up with a unified position.
They said that one of the countries that has signaled opposition to such sanctions, Austria, joined the 15-nation Security Council in January and will have a seat until the end of 2010. Diplomats say that Turkey, which joined at the same time and shares a border with Iran, would also have difficulty supporting such measures.
The US Congress is ready to have the US act alone.
The Senate last week passed legislation that would ban companies that sell gasoline and other refined oil products to Iran from receiving Energy Department contracts to deliver crude to the US Strategic Petroleum Reserve.
Seifollah Jashnsaz, managing director of Iran's national oil company, said over the weekend that Tehran was not worried about meeting domestic gasoline demand if fuel sanctions were imposed. He called the Senate bill "a meaningless measure."
The House of Representatives has approved a separate bill that would bar the US Export-Import Bank from providing credit, insurance or loan repayment guarantees to foreign oil companies that supply fuel to Iran or help expand the country's domestic refining capacity.
US lawmakers would have to wait to finalize a sanctions bill on Iran until September when they get back from the summer recess.
Some energy experts have said fuel sanctions on Iran would not have much impact, because the country has porous borders and a history of smuggling petroleum products.