Sanctions could target the companies that buy oil from Iran, putting massive pressure on the Iranian government but also potentially driving up oil prices.
NEW YORK (CNNMoney) -- When President Obama upped the ante last week in U.S efforts to isolate Iran, he also laid the groundwork for measures that could cut off Iranian oil exports and cause a spike in crude prices.
The U.S. government tightened restrictions on companies that provide Iran with equipment and expertise necessary to run its vast oil and chemical industry.
But it it also declared the entire Iranian banking system, including its central bank, a "threat."
And that caused oil experts to take notice.
Iran conducts its 2.2 million barrel-a-day oil export business through its central bank, using it as an intermediary between the national oil company and its oil customers.
Declaring the bank a threat opens the door for the United States to impose sanctions on any company or government that deals with the bank, which would include companies from places like China, Japan and India that buy Iranian oil.
"It would force any country to chose between doing businesses with Iran and doing business with the United States," said Robert McNally, head of the energy consultancy the Rapidan Group and a former adviser to President George W. Bush.
And that would be a direct attempt to cut off Iran's oil exports.
Iran is the world's third largest oil exporter behind Saudi Arabia and Russia, according to the U.S. Energy Information Agency. The Iranian government gets 50% of its revenues from its oil exports.
The country exports more oil than Libya, which is still mostly off the market. Most of the world's remaining spare oil production capacity sits in Saudi Arabia, and the Saudis would be hard pressed to make up for another 2.2 million barrels a day.
So curtailing Iran's exports would have the likely effect of sending the price of oil higher.
But some experts question the impact even these new stricter sanctions will have on Iran's ability to sell its oil.
Sanctioning companies that buy Iranian oil would hobble Iranian oil exports but not stop them all together, they say.
Oil is a fungible commodity, meaning that it's possible to fill a tanker, ship it to different ports, sell the oil to different firms and have it end up on world markets with little trace of its origin.
"Iranian oil would still flow," said Manouchehr Takin, an energy analyst at the Center for Global Energy Studies in London. But this process is harder and more expensive.
The administration is hoping that the threat of these sanctions, combined with all the other sanctions that have been announced over the years, will be enough to get the Iranian regime to reconsider its nuclear program or to force a division within the government leading to a new regime with more pro-Western policies.
The current Iranian government has been sparing with the West over its nuclear program for years. Iranian leaders contend the program is for peaceful purposes, but most Western governments think it's designed to produce a bomb.
Plus, Iran's current leader has called for Israel's destruction.
But diffusing the situation has proven difficult. Many military analysts say a strike on Iran's well-fortified nuclear facilities would only delay its program by a matter of months and risks rallying its citizens around the current government.
So the Obama administration "is trying to build more internal fissures that we can then leverage," said Juan Zarate, also a member of the former Bush administration and now an analyst at the Center for Strategic and International Studies. "The financial noose will continue to tighten, and life will not get any easier for the Iranians."
But the implementation of sanctions is no guarantee to bring about the social change the West desires, either. Too many sanctions, like those that restrict the supply of food, could solidify support for the regime inside the country and push it to become even more aggressive.
Then there's the price of oil. What happens if the sanctions are too effective and Iran can't get its oil to market?
|What we want Apple to unveil at WWDC|
|Millennials squeezed out of buying a home|
|7 traits the rich have in common|
|Big Data knows you're sick, tired and depressed|
|Your car is a giant computer - and it can be hacked|
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.92%||3.83%|
|15 yr fixed||2.99%||2.98%|
|30 yr refi||4.01%||3.92%|
|15 yr refi||3.08%||3.08%|
Today's featured rates: