Aim higher, reach further.
Get the Wall Street Journal $12 for 12 weeks. Subscribe Now

Iran Can't Withdraw Much Oil Revenue Under Interim Nuclear Deal

Difficulties Could Hinder Negotiations for a Comprehensive Agreement

A woman bought fruit in Tehran in January as Iran was implementing its end of the interim nuclear deal. ENLARGE
A woman bought fruit in Tehran in January as Iran was implementing its end of the interim nuclear deal. Agence France-Presse/Getty Images

Iran has been unable to withdraw much of the unfrozen oil revenue it was to receive under a November interim nuclear deal, a possible complication for efforts to end the decadelong standoff over Tehran's nuclear ambitions.

The problems were outlined in interviews with nearly a dozen Western and Iranian officials and diplomats, bankers and lawyers with knowledge of the issue.

An estimated $100 billion in payments for Iranian oil imports has been locked up in accounts in the importing countries in compliance with U.S. banking sanctions that have been among the most effective in pressuring Iran economically. Only $4.2 billion was to be freed up gradually under the interim deal.


One reason Iran is having difficulty tapping the unfrozen revenue is that banks remain fearful they could violate tight U.S. financial sanctions, especially while the outcome of talks on a final nuclear deal remains uncertain. If financial institutions flout sanctions, they could be shut out of the U.S. banking system, which clears dollar transactions, or face huge fines.

Some Western officials partly blame Iran for the delay. Tehran has been slow to set payment instructions specifying where the money should be sent and, in some cases, how it will use the funds—information banks may require before releasing the money.

Iran's United Nations mission and foreign ministry officials declined to comment. However, Iranian Foreign Minister Javad Zarif in March publicly questioned the West's willingness "to fulfill its commitments" to implement November's accord. Western officials insist they are doing so.


Iran's difficulty withdrawing the funds could undermine confidence building between Tehran and the six world powers it negotiates with. It could also stymie President Hasan Rouhani's ability to showcase domestically the benefits of the interim nuclear deal. He came to office last summer promising diplomatic outreach to ease sanctions.

The negotiations between Iran and the six powers, now focused on a comprehensive, permanent agreement to prevent Iran from obtaining nuclear weapons, are set to resume in Vienna on Tuesday.

Iran's economy has stabilized somewhat and oil revenue has increased since the interim deal was reached in November.

There are concerns in the U.S. Congress and elsewhere that sanctions relief could undermine pressure on Tehran to reach a final nuclear deal. Tehran's troubles tapping the funds suggest sanctions remain a powerful constraint and may temper those worries.

Seeking to speed the release of funds, the U.S. and other Western governments have stepped in, working quietly to encourage international banks and regulators to help Iran access the revenue, diplomats said. But those efforts have only partly succeeded.

The $4.2 billion in unfrozen oil revenue was the biggest single gain in a package of sanctions relief worth around $7 billion for Iran, according to U.S. officials. In exchange, Iran agreed to curtail some of the most dangerous elements of its nuclear program. Iran insists its pursuits are for purely peaceful purposes such as producing energy and medical research.

The difficulty helping Iran withdraw the funds shows the practical challenges of delivering money to a country largely isolated from the global banking system because of the tight web of sanctions.

On Feb. 3, the first payment of $550 million in unfrozen oil revenue was transferred from a Japanese bank to Banque de Commerce et de Placements, or BCP, in Switzerland. As of Wednesday, the funds hadn't been withdrawn.

A BCP spokesman declined to comment. A spokeswoman for the Swiss Economic Affairs department, Marie Avet, confirmed the money had come to a Swiss bank. Switzerland, which hosted the talks that produced November's accord, had been asked to help facilitate the repatriation of funds, she said.

A senior U.S. official confirmed that three tranches, worth $1.55 billion, have been released—meaning the U.S. has legally informed banks holding the money it is no longer subject to sanctions. The U.S. plans to unfreeze another $1 billion over five days starting Wednesday. It remains unclear where the other two tranches of already released funds are.

Several diplomats said Iran hasn't yet tapped a significant part of the total. Western officials said they were making progress identifying a group of banks that can work with Iran to repatriate unfrozen funds.

"We have done everything we made a commitment to do," a senior U.S. official said late Friday. "Our teams have been working very hard to facilitate everything that was required."

Banks were already cautious about financing trade with Iran that was permitted before the interim deal, such as food and medicine. That remains true of commerce opened up under the November deal. Several European banks have been hit by huge fines from U.S. authorities over the last two years for allegedly engaging in improper dealings with Iran. BNP Paribas BNP 0.83 % said in February it had set aside $1.1 billion against potential fines for any violations of U.S. sanctions.

After years of restrictions, "financial institutions are very careful when it comes to Iran and, before doing something, want to be reassured 1,000 times," said one Western diplomat.

To ease concerns, the U.S. has sent letters to a number of banks "clarifying the applicability of U.S. sanctions to various circumstances," a senior official said. There have also been regular discussions between U.S., European and Iranian officials in recent weeks about the problem.

One concern is that Iran could eventually use the funds for purposes the U.S. doesn't approve of. U.S. officials have warned publicly they will crack down vigorously on all those involved in violations of the remaining sanctions.

Banks also face practical hurdles in helping Iran tap the money, said Farhad Alavi, a lawyer with Akrivis Law Group, a Washington-based firm. Delivering cash or precious metals could, in some cases, require firms to get hold of and then fly crate-loads of bank notes or gold to the Iranians at significant cost.

Write to Laurence Norman at and Nour Malas at

There are 5 comments.
1 person watching.
David Dahl

Once the deal is reached the big losers will be the Apartheid regimes in Isreal and Saudi.
Their reaction will be lovely to witness :)


"One reason Iran is having difficulty tapping the unfrozen revenues is that banks remain fearful they could violate tight U.S. financial sanctions, especially while the outcome of the final nuclear talks remains uncertain."

After the way the government went after JP Morgan for crimes committed by a subsidiary they bought only because the government asked to do so, I can't say that I blame them. You reap what you sow.

Charles Jones

So, is the purpose of this article to make me feel sorry for our enemy because they are having difficulty accessing some money? Are we to be extra nice at the next meeting or cut them some slack because of this? While Iran is conspiring against us and killing our soldiers in several areas...we get an article sympathetic to the enemy that wants to nuc us? How Obama like. Maybe Holder could investigate this obvious case of discrimination.


Don't worry, Holder WILL investigate. After what happened to JP Morgan I can't say that I blame the banks, but they may be in a darn it you do, darn if you don't situation. This government is highly unpredictable, perhaps because they don't know what they are doing?

John W. Condon

Maybe they do know what they are doing. They just want to confuse people so they can get away with more before the jig is up. They are working even while running out the clock.

Show More Comments
Show More Archives

Popular on WSJ

Editors’ Picks