Iran eyes Asia buyers to protect oil exports from US sanctions
Iran is pinning hopes on Asian oil consumers as it battles to protect crude exports and shield its economy from US sanctions.
The US has been lobbying oil importers such as India, China and Japan to end crude purchases from Iran, as Donald Trump’s administration ratchets up the pressure on the Islamic Republic, the Financial Times wrote.
Washington has suggested waivers to consumer countries keen to continue buying Iranian oil will be in short supply.
Iranian analysts and Western diplomats say that China, which is caught up in a spat of its own with the US over trade tariffs, could be the determining factor in helping Tehran withstand economic pressure when new sanctions on its vital energy industry kick in from November.
“If China...buys Iran’s oil, we can resist the US,” said one Iranian economic analyst, who declined to be named. “China is the only country which can tell the US off.”
China, India, Japan and South Korea account for almost 65 percent of the 2.7 million barrels a day Iran exported in May, according to Kpler, the tracking company.
Iranian crude is also exported to countries in Europe as well as to Turkey and elsewhere in the Middle East.
China is likely to object to any US demands that it stop buying from Tehran.
“The unilateral sanctions [in Iran] should be abandoned because they are counterproductive,” a spokesperson for China’s Foreign Ministry said, adding that the country continued to support the nuclear deal.
Hossein Kazempour Ardebili, Iran’s OPEC governor, said the market could not afford to lose a significant number of Iranian barrels. “You will be a hostage to Saudi Arabia and Russia’s production capabilities and they will be able to do little,” he told the Financial Times in a statement directed at Trump.
Russia, although not an importer of Iranian crude, could also have significant influence. Moscow has floated the idea of a goods-for-oil deal to trade Iranian oil, and Tehran last week touted $50 billion worth of potential investments by Russian companies in its oil and gas sector.
“The US has declared an economic war against us,” Es’haq Jahangiri, Iran’s first vice president, said this month. He added: “We plan to export oil at the maximum possible levels.”
It is not just Iran that is worried by the impact of sanctions. It creates difficulties for consumer countries, too. When the Obama administration placed sanctions on Iran, Asian buyers could import oil but at much lower levels.
“We are in continuous talks with the US to win a waiver in order to minimize the adverse impact that Washington’s re-imposition of sanctions and the expected stoppage of Iranian oil imports will have on our related industries,” South Korea’s Energy Ministry said in a statement.
A senior Indian Petroleum Ministry official said New Delhi is seeking a waiver to import crude oil from Iran. Yet India also hopes the Trump administration’s desire for it to play a greater role in Asian regional security will count in its favor.
Last weekend, Washington turned down Britain, France and Germany’s appeal for exemptions to European companies doing business in Iran.
Energy industry executives say that while Tehran might take comfort from governments keen to continue trading, refiners that rely on global banking, insurance and shipping industries, underpinned by US dollars, are wary.
Even Iran’s Oil Minister Bijan Namdar Zanganeh said talks with European governments keen to preserve the nuclear deal and to ensure exports could continue was ‘not satisfactory’.
Tehran has said it would permit private companies to export Iranian crude as a way of getting round the impact of US sanctions.
Zanganeh insisted that the country’s exports had not fallen. “We need to wait and see in which direction the market will go,” he said. “But I repeat that Iran will stand against the US actions and will do its best to maintain our market share.”