White House says oil market stable enough to squeeze Iran

The White House said Friday that it had decided to continue to put strong pressure through sanctions on Iran despite high oil prices.

Obama said that he was confident that further sanctions would not impact oil prices as countries like Saudi Arabia could make up for an oil shortage, and the US strategic oil reserve could be tapped.

The statement was released after a defense bill signed in December also required the White House to determine whether further sanctions on Iran would gravely impact the world oil market by March 31, 2012.

High oil prices have become a central theme of this year's US presidential elections, with Republicans trying to pin high oil prices on the President.

According to the Associated Press, Obama's plan paves the way for the federal government to penalize foreign banks that do business with Iran by threatening to close down their business in the US.

"I will closely monitor this situation to assure that the market can continue to accommodate a reduction in purchases of petroleum and petroleum products from Iran," Obama said in a statement, according to BBC.

In its push for further sanctions, the US is aiming at Iran's central bank, into which the country's oil wealth flows.

Iran is facing intense international pressure to end what many suspect is a nascent nuclear weapons program.

Iran claims their nuclear program is purely for civilian purposes.

A European-wide ban on imported Iranian oil is set to take effect on July 1, while US sanctions continue to squeeze the Iran's economy.

"There currently appears to be sufficient supply of non-Iranian oil to permit foreign countries to significantly reduce their import of Iranian oil," the statement said, according to Reuters.

"In fact, many purchasers of Iranian crude oil have already reduced their purchases or announced they are in productive discussions with alternative suppliers."