Obama Could Use Iraq Crisis To Ease Oil Sanctions On Iran, Warns Security Expert

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The Obama administration should not be tempted to use the Iraq crisis to ease economic sanctions on Iran, warns a former national security adviser to Vice President Dick Cheney.

Islamic militants with the group ISIS are putting huge pressure on international oil markets and could idle more Iraqi oil production if the group is able to push farther south. Oil prices shot up Wednesday on news that militants attacked Iraq’s largest oil refinery, and ExxonMobil and BP have begun evacuating staff from the region.

Further pressure on oil supplies could cause oil prices to spike, making it more tempting for the White House to consider lifting sanctions on Iran to put more supply on the global market. This would be a bad idea says former Cheney security adviser John Hannah.

“There could be that danger, that temptation,” Hannah told The Daily Caller News Foundation. “Given how important this Iranian deal looks to them on the nuclear front, I think the prospect of easing sanctions on Iran and on Iran’s return on global energy markets… the probability is pretty high.”

ISIS militants threaten to shut off the country’s contribution to global oil supplies, which could drive up prices. Crude exports from Kurdish-controlled northern Iraq are being hampered by ISIS’s invasion and the al-Qaida splinter group’s push south could cut off more oil supplies.

To complicate things, Iran and Shia militia groups have intervened. Iran has sent its Revolutionary Guard to bolster Iraqi government defenses, meaning the U.S. and the Islamic Republic share a foreign policy interest — an interest that could be used to leverage the easing of sanctions on its economy and nuclear program.

“They were looking for an excuse, looking for an achievement in terms of these nuclear negotiations in order to begin easing sanctions, looking for some grand deal,” said Hannah, who is currently a senior fellow at the Foundation for Defense of Democracies.

“I would never do a deal with the Iranians on the assumption that they’re going to be our allies and saviors in Iraq,” Hannah said. “I think that’s a fool’s errand. Iran has probably just as much U.S. blood on their hands in Iraq as al-Qaida does.”

Hannah is not the only one who worries that President Obama would consider sanctions relief in return for aiding Iraq in its fight against ISIS. Israel expressed similar fears that such a deal could be made between the U.S. and Iran.

Treasury Secretary Jack Lew tried to ease some of Israel’s concerns that the U.S. would waver on Iranian sanctions to cut a deal in Iraq.

“Iran is losing a significant amount in oil sales alone from the sanctions that remain in place, more than the value of the temporary relief,” Lew said in a speech in Jerusalem Wednesday.

“We will take the time to do this right, and we will not rush into a bad deal,” Lew added. “No deal is better than a bad deal.”

Iraqi oil production is set to satisfy a huge portion of future energy demand, according to the International Energy Agency. In 2013, Iraqi production made up about 4 percent of global oil production, producing more than 3 million barrels per day. By 2020, daily oil production is expected to reach 6.1 million barrels — accounting for 45 percent of global oil production growth.

Pressure on the Obama administration to get more oil on the market could mount as ISIS pushes south and if more of the country falls into chaos. Oil prices have already inched up on the news ISIS was taking over the country’s largest oil refinery and could be pushed up further if militants are able to take Baghdad.

“So the prospect that we have any kind of overlapping long term interests over the future of Iraq just seems to me like a complete fool’s errand,” Hannah said.

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