Iran’s Oil Minister Rostam Qasemi said sanctions recently imposed against his country by the US, 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.
That view was echoed by Deputy Oil Minister and National Iranian Oil Co. Managing Director Ahmad Ghalebani 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 Ghalebani in response to remarks by French officials in support of the new round of sanctions.
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.
“Increasing the number of countries that don't buy that crude would certainly increase the pressure on Iran,” said Victor Schum of Purvin & Gertz in Singapore. “But the question is whether developed and emerging buyers like China and India would stop buying more.”
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, despite its concerns about the country's nuclear ambitions.
“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” last March.
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 US, 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.
“As a result of this coordinated effort, Iran is now cut off from three of the world’s largest financial sectors,” US Sec. of the Treasury Tim Geithner said of the announcements from the US, UK, and Canadian governments.
The UK imposed the toughest sanctions with Chancellor of the Exchequer George Osborne announcing that British financial institutions would have to stop all dealings with Iranian financial institutions, including the Central Bank of Iran.
“We believe that the Iranian regime's actions pose a significant threat to the UK's national security and the international community," said Osborne, marking the first time that the UK has blacklisted a country's entire banking sector.
Despite the optimism of Iranian officials over their ability to circumvent the sales ban, analyst Gala Rianni of IHS Global Insight said the new round of financial sanctions will make life even more difficult than at present for Iran’s oil industry.
“Its difficulties in 2011 to get paid for its oil exports have been felt in the economy and further sanctions on the financial sector will make it more difficult to trade with not just Western states, but many of its other global partners,” she said.
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