Sanctions have little effect on Iran: Independent analysts
Independent analysts suggested that, absent cooperation from Asian buyers such as China, India, and Japan, the new sanctions will probably have little effect on Iran.
“The question is whether developed and emerging buyers like China and India would stop buying more oil from Iran”, said Victor Schum of Purvin & Gertz in Singapore.
China accounted for 22 percent of Iran’s export volumes in the first half of this year and increased its purchases by 27 percent over the same period of 2010, U.S. data show. The EU, Japan and India bought 18 percent, 14 percent and 13 percent of Iran’s oil, respectively.
China’s economic ties don’t violate UN Security Council resolutions, Foreign Ministry spokesman Liu Weimin told reporters on Nov. 24.
India and China have yet to make any announcement of their positions, but Japan is already on record as saying it is unlikely to stop importing crude oil from Iran.
“Iran represents roughly 10% of Japan's crude imports,” said a spokesperson for Japan’s Ministry of Foreign Affairs. “We need to be very careful in making such a decision, given that our priority is securing energy supply in the aftermath of the massive earthquake in last March”, he added.
Japan’s demand for oil has also risen significantly since the earthquake and tsunami, which have effectively shut down much of the country’s nuclear power facilities.
According to the Federation of Electric Power Cos. of Japan, the country has increased its use of heavy fuel oil by 21% to 117,236 b/d and crude oil by 35% to 102,455 b/d.
The U.S., UK, and Canada imposed new sanctions on Iran on Nov. 22, including measures to restrict the activities of the country’s central bank, 2 weeks after a UN report provided evidence that Iran was working on a nuclear weapon.
Iranian oil officials 'unafraid' of recently imposed sanctions
Meanwhile, Iran’s Oil Minister Rostam Qasemi said sanctions recently imposed against his country by the U.S., the UK, and Canada will present global oil markets with problems in securing oil of equal quality and quantity.
“Taking into account the quality of Iranian oil and Iran's second top ranking in terms of oil production, the consumers cannot be provided oil with such a quality. So, there is no alternative for Iranian oil supply,” Qasemi said.
Iranian Oil Minister Rostam Qasemi said in a Nov. 19 television interview with Al Jazeera that any disruption to his nation’s oil exports would create “severe problems” for global markets. Iran abuts the Strait of Hormuz, a chokepoint for about one-fifth of the world’s traded oil supplies.
“If Iran were to respond to outside aggression by sealing off the Straits of Hormuz, this would severely hamper exports from Saudi Arabia, Iraq, Iran, Kuwait, Qatar and the United Arab Emirates,” researchers led by David Wech at Vienna-based JBC Energy said in a Nov. 23 report.
That view was echoed by Deputy Oil Minister and National Iranian Oil Co. Managing Director Ahmad Qalebani who said Iran has no fear about the loss of European markets due to the presence of alternative buyers.
“Many countries want Iranian crude and we are supplying them with their needed oil, so we are not afraid of not selling it to Europeans,” said Qalebani in response to remarks by French officials in support of the new round of sanctions.
EU bluff on oil embargo
Refiners in Europe, collectively the second-largest market for Iranian oil after China, may also face difficulties from tighter constraints on transactions with Iran, experts say.
“Europe has been importing crude oil from Iran, and it certainly hasn’t lowered amounts recently,” Jakob of Petromatrix said. “Greece is importing most of its crude oil from Iran”, he added.
Oil prices rose this year as political turmoil in the Middle East stoked concern about the reliability of supply. The price of European benchmark Brent crude rose to more than $125 barrels a day in April as exports from Libya dwindled because of the tensions in that country. Brent has risen 16 percent this year and was trading at $110.33 a barrel in London.
EU ban on Iran oil imports won’t bite
A French-backed proposal to stop Iranian oil imports into Europe could inconvenience Tehran, but it would have a crippling effect only if big Asian buyers join in, analysts stated.
European Union foreign ministers will recommend additional Iran sanctions on Thursday including a possible oil import ban, say diplomats who have seen a draft of a planned statement, although it is still up for negotiation and at least one country has registered significant concerns.
No one expects China, India, Japan or South Korea to stop buying Iranian crude, not for now at least.
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