LOS ANGELES, June 26 – Iran’s government, faced with the imposition of new oil sanctions by the European Union on July 1, nonetheless remained defiant, saying the coming measures would hinder negotiations over the country’s nuclear program.
“Actions that are against the agreements between Iran and the P5+1 will have a negative impact on reaching an acceptable resolution,” said foreign ministry spokesman Ramin Mehmanparast, referring to permanent UN Security Council members the U.S., U.K., France, China and Russia plus Germany.
Iran and the P5+1 have had two rounds of unsuccessful talks so far, and the third round – scheduled for July 3 but downgraded to the level of technical experts – is considered unlikely to bring any breakthrough in the impasse between the two sides.
“Taking measures against our national interests (by the EU) will depict a negative image of hostility towards our nation,” Mehmanparast said. “It is better that European officials think about their internal issues.”
‘PROBLEMS FOR EUROPE’
Sanctions would only be “damaging” for EU-Iran relations, he said. “As well as possible impacts on the negotiations (with the P5+1), sanctions will intensify the economic and social problems in European countries,” he said.
Iran’s Foreign Minister Ali Akbar Salehi, like other Iranian officials, insisted that the sanctions would have little effect on his country, saying that, “We are accustomed to sanctions.”
But the International Energy Agency said sanctions already in place are having a significant adverse effect on the economy of the Islamic Republic, with oil exports falling by 40% over the past six months to 1.5 million b/d.
IEA also said Iran’s oil storage facilities and anchored tankers are nearly full as the country tries to avoid shutting down production from its oil fields. In a June 13 report, IEA said Iran had up to 42 million barrels (bbl) of oil stored in its anchored tanker fleet.
STEADILY SHRINKING EXPORTS
Iran’s Oil Minister Rostam Qasemi denied the IEA claims, saying that, “Those are their figures. For the moment, our exports haven’t gone down a lot.” Qasemi claimed Iran does not have a “lot of oil” stored at sea, adding that the country’s tankers are being used to transport oil to “several countries.”
The number of countries buying Iran’s oil is steadily shrinking, with South Korea the latest to announce its decision to reduce imports from the Islamic Republic due to the pending E.U. sanctions.
“The EU will stop Iranian crude oil imports from July 1 and will stop offering insurance and reinsurance on Iranian oil imports. Therefore South Korea ‘s Iranian crude imports will be suspended,” said a joint statement released by South Korea’s ministries of commerce, foreign affairs and finance.
SEOUL LOOKS ELSEWHERE
“The government will continue efforts to minimize the effects on domestic industry and the economy and it will continue negotiations,” the statement said, adding that Seoul has been in talks with other suppliers such as Iraq, Kuwait, Qatar and the U.A.E.
Last week, U.S. Secretary of State Hilary Clinton confirmed that China, along with several other Asian nations, was in the process of reducing its imports of Iran’s oil. “We’ve seen China slowly but surely take actions,” said Clinton.
“I have to certify under American laws whether or not countries are reducing their purchases of crude oil from Iran and I was able to certify that India was, Japan was, South Korea was,” Clinton said. “And we think, based on the latest data, that China is also moving in that direction.”
In an effort to continue exporting its oil, Iran has been offering steep discounts, especially to Asian buyers. But those buyers, aware of the problems in purchasing Tehran’s oil, will be asking for even steeper discounts.
STEEP DISCOUNTS SOUGHT
“We will strongly press for prices that better correspond to the hassles of procurement,” an official at a major Japanese oil distributor said at the end of May, ahead of talks with the National Iranian Oil Co.
The talks concluded earlier this month, with the Iranian side offering a discount of 0.09 dollar against Saudi prices, the Nikkei business daily reported. “The latest discount was 0.08 dollar larger than the April-June quarter,” the report said.
The discount agreed to by Iranian officials marks a reversal from last autumn when Japan and other buyers sought price cuts as news emerged of Iran’s alleged efforts to produce nuclear weapons. But those negotiations failed to yield any major discounting in the January-March and April-June quarters.
One Tehran-based European expert summed up the significance of this reversal in fortune for Iran.
SANCTIONS COST IRAN DEARLY
“Iran hopes a price rise will compensate for its lowered exports, but increased production in other countries, especially Saudi Arabia, have allowed a gradual phase-in of the embargo that has not destabilized the market,” he said.
“Between the cut in exports, the discounts, the payment in local money, and the difficulty in repatriating the cash, the sanctions are starting to cost Iran dearly,” he said.
That’s what comes of crossing swords in the Gulf.
© Glamma Productions Inc. 2012