Aletho News

Iran To Survive US Oil Embargo

Experts regard all this as an attempt by Washington to economically undermine the EU

By Konstantin Garibov | Voice of Russia | January 21, 2012

The ongoing US pressure on the European Union, Turkey, Japan, China and India to halt imports of Iranian oil and suspend any related financial transactions is facing resistance by oil importing companies and nations.

Last week India and Turkey refused to sign up to a proposed embargo on the import of Iranian crude, just days after the same had been announced by China.

Moreover, just as the EU is bracing itself for a decision on halting Iranian oil imports it will have to make on January 23, a number of Western companies are hastily extending their contracts with Iranian partners to avoid being hit by the proposed sanctions.

In an affront to Washington, India and Turkey have said although they would comply with the standing UN sanctions against Tehran, they would ignore oil embargoes introduced by individual countries. Iranian oil accounts for just under 10 percent of India’s needs and a hefty 30 percent of Turkish imports.

US Treasury Secretary Timothy Geithner, dispatched to drum up support for the proposed US oil embargo, had a bit more luck in Tokyo where he was assured that Japan would cut down its imports of Iranian crude. After the EU, China is the world’s third biggest buyer of Iranian oil. South Korea, which is buying about as much Iranian oil as India, is still undecided on whether or not to stand by Washington on this matter. A Moscow-based expert, Alexander Salitsky, still believes that Americans will eventually succeed in bringing South Koreans on board, just like they did with Japan.

But despite siding with the US on the matter, Japan and South Korea are still facing growing domestic discontent over their role as ‘junior partners’ to the American Big Brother. Even if they join in the sanctions, the sanctions are unlikely to succeed. As for China and India, they will keep importing Iranian oil, which means that America is losing its sway in Asia.

It looks like during their planned meeting on Monday EU foreign ministers will decide to stop buying Iranian oil, which is going to be a hard call for many of them. Another option is that by joining the US embargo per se, the EU will take its time implementing it as they will need a while to find a new supplier, says Lyudmila Kulagina, another Moscow-based expert.

“The US-proposed embargo will certainly add to Europeans’ economic woes, forcing them to look for new sources of much-needed oil supply which won’t be easy…”

Some experts regard all this as an attempt by Washington to play the Iranian oil card to economically undermine the EU which, unlike America, imports up to 40 percent of its crude oil from Iran. Vladislav Belov from the Institute of European Studies in Moscow disagrees.

“The ongoing global recession is playing right into the hands of the US and the EU by bringing down the overall demand for oil and gas… However, the US might eventually feel the pinch if the embargo sends oil prices up. In any case, I don’t believe Washington is actually using the proposed sanctions as a means of pressuring Europeans with the prospect of a possible oil deficit…”

In any event, if the US succeeds in pulling the plug on Iranian oil imports, even incrementally, Tehran will apparently try offering additional supplies to either China or India whose economies remain the main drivers of global economic growth. Turkey too could jack up its oil imports with an eye to partially reselling them to European buyers.

January 22, 2012 - Posted by aletho | Economics