The U.S. is currently imposing sanctions on Iranian crude oil over the country’s nuclear ambitions.
The sanctions stipulate any bank that processes Iranian oil transactions will be prohibited from doing business in the United States, however the U.S. has not yet enforced these restrictions.
These are the strictest sanctions the U.S has ever placed on Iran’s oil industry and members of the international community seem reluctant to support them.
China — the number one importer of Iranian oil — does not endorse U.S. attempts to pressure Iran over its controversial nuclear program.
China’s plan to reduce the number of oil imports from Iran in January and February should not be viewed as an act of compliance with the imposed U.S. Sanctions.
Instead, it intends to use international consternation over Iran’s nuclear program as a means through which it can negotiate a lower price. Experts suspect that in order to maintain steady oil output Iran may have to discount oil prices by as much as 15 percent.
On Thursday Japanese Finance Minister Jun Azumi — wielding to appeals made by U.S. Treasury Secretary Timothy Geithner — announced the country plans to shift away from buying Iranian crude oil.
Azumi went out of his way however to emphasis the fact the process would be slow going, stating Japan currently buys 10 percent of its oil from Iran and would face irreparable damage if that number was cut to zero.
Later that day Japan’s Chief Cabinet Secretary Osamu Fujimura rebuffed Azumi’s promise to reduce Iranian oil imports, mentioning that it was just one of the options on the table and was by no means a sure thing.
Reluctance to fully endorse the U.S. embargo is due to a scarcity of available alternatives.
Japan and China have turned to Saudi Arabia and the United Arab Emirates but it is unclear if the two OPEC members can make up for the oil that would be lost if a total ban was placed on Iranian crude.
The EU has committed to a complete embargo on Iranian crude but has delayed its implementation due to fears the ban would consequently place undue, as well as untimely, strain on its citizens.
A 6-month grace period has been enacted to allow companies to find available alternatives but analysts expect that even if alternatives are discovered the transition will be anything but smooth.
Greece, Italy, and Spain do not agree with the EU’s endorsement of the U.S. sanctions. The three countries account for 68.5 percent of EU imports from Iran.
Until next time,
Nate
