NEW YORK (Reuters) - U.S. economic sanctions against Iran have slashed the country's crude exports and oil revenue, the U.S. Treasury said on Wednesday as it vowed to keep up the pressure on Tehran to prevent the Iranian government from getting nuclear weapons.
Since the beginning of the year, the United States has threatened to block certain foreign financial entities from U.S. markets unless Iran's major trading partners reduced their purchases of Iranian crude.
U.S. efforts have paid off with Iranian crude exports down to about 1 million barrels of oil per day from the approximately 2.4 million barrels last year, the U.S. Treasury said.
This hit to exports is costing Iran about $5 billion a month, "forcing the Iranian government to cut its budget because of a lack of revenue," Treasury Undersecretary David Cohen said at the New York University School of Law.
"Our goal isn't to affect their GDP growth, it's to affect their political calculus," added Cohen, the undersecretary for terrorism and financial intelligence.
Iran denies that it is seeking nuclear weapons, saying its atomic program is solely for peaceful purposes such as power generation and medical uses.
U.S. sanctions were designed to crimp Tehran's oil revenues by stopping financial institutions from conducting oil transactions with Iran's central bank, which handles most of the country's oil payments.
However, if countries significantly reduced their Iranian oil imports, they won a temporary reprieve from the U.S. law. More than a dozen countries, including Iran's biggest oil buyers China and India, earned exemptions.
"Sanctions have effectively terminated international access for most Iranian banks," said Cohen. "Today, the Iranian government is relegated to the backwaters of the international financial system, and they know it."
Although U.S. sanctions have squeezed Iran from global markets, Israel has demanded that the Obama administration take a tougher line against Iran. Republican presidential candidate Mitt Romney has accused the administration of being too tough on Israel and not hard enough on Iran.
Cohen said the window for a diplomatic solution with Iran is not "indefinite," but he declined to be more specific.
The Obama administration recently unveiled new sanctions that target foreign banks that handle transactions for Iranian oil or handle large transactions from the National Iranian Oil Company (NIOC) or Naftiran Intertrade Company (NICO), two players in Iran's oil trade.
Citing sanctions the United States has imposed on Iran, Syria and, last year, on Libya, Cohen said the strategy is "a heck of a lot better than a war."
Reporting by Jonathan Spicer and Rachelle Younglai; Editing by Bob Burgdorfer and Lisa Shumaker