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Total has become the latest big oil company to halt petrol sales to Iran, just days before Barack Obama, US president, signs into law new sanctions targeted at Tehran’s reliance on imported petroleum.

The French energy group joined BP and Royal Dutch Shell as well as all the big oil traders in shunning Tehran before the unilateral US sanctions came into force.

The legislation, which last week won final approval by overwhelming margins in both the House of Representatives and the Senate, imposes penalties on international groups that help provide Iran with refined oil, as well as banks that do business with blacklisted Iranian institutions.

Both Mr Obama and Hillary Clinton, US secretary of state, have welcomed the measure, although the administration had sought more latitude in implementing the sanctions. Under the bill, international companies that defy the unilateral measures could have their US assets frozen and be barred from all financial transactions with US banks, as well as being denied US government contracts.

US companies have long been barred from trade with, and investment in, Iran, with only minor exceptions.

Traders said Total stopped supplying Tehran about a month ago. It remains unclear whether some deliveries already agreed were still pending for delivery. Christophe de Margerie, chief executive, said in April the group would stop petrol sales to Iran if Washington passed legislation penalising suppliers. Total declined to comment.

However, the sanctions were unlikely to cut Tehran off from the global petrol market completely. Traders said Iran’s longstanding suppliers were being replaced by small Dubai-based and Chinese companies. They said Iran would be able to source enough supply in the future, although it would have to pay a premium.

Vitol, Glencore and Trafigura, the world’s largest oil traders which supplied Tehran with half its petrol imports of 130,000 barrels a day, stopped selling to the country at the beginning of the year because of mounting political risk.

The new US legislation is among a series of measures intended to increase pressure on Tehran in the wake of UN sanctions agreed this month. European Union leaders have declared that the bloc will soon prohibit new European investment or technical assistance for Iran’s refineries and liquid natural gas facilities, along with taking action against banks.

Although Iran is one of the world’s biggest oil producers, its refineries are dilapidated and it suffers from runaway petrol demand because of generous subsidies.

Tehran has claimed it can become self-sufficient in petrol over the next three years but the International Energy Agency, the western countries’ watchdog, said the target was implausible.

Copyright The Financial Times Limited 2017. All rights reserved.
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