Asia Challenges US, Europe Over Iran: Oil Price Seen Rising

By Konstantin Garibov

China, India and Turkey have warned that they won’t support a ban on Iranian oil imports and will try and prevent the US from blocking Iranian oil supplies. Japan and South Korea are planning to follow suit. Europe introduced an emnargo on Iran oil imports this week. The Voice of Russia’s Konstantin Garibov reports.

The new package of sanctions against Tehran which was approved by EU foreign ministers on Monday provides for a gradual ban on the import of Iranian oil and oil products. The EU plans to stop purchasing oil from Iran by July 1st . Until recently, the main buyers of Iranian oil in Europe were Greece, Italy and Spain, who bought 600,000 barrels a day.

Europe decided to buy itself some time so that it could find alternatives to Iranian oil imports. Yevgeny Satanovsky of the Institute of the Middle East says:

“Europe will have no problems replacing Iranian oil with oil from Saudi Arabia, the United Arab Emirates, or Kuwait. The Gulf Cooperation Council has already made it clear that it will recoup the losses.”

Meanwhile, Europe might be facing quite a headache as its oil refineries were designed to refine Iranian oil, and what’s more, a particular brand of it. Experts have been speculating on who will be hit by the embargo harder, the seller or the buyers? The IMF predicts a 20-30% increase in the cost of oil. That means an increase by 20-30 dollars. Sergei Druzhilovsky of the Moscow Institute for International Relations says:

“18-20 percent of Iranian oil is purchased by Europe. A ban on these exports will cause no serious problems for the Iranian economy. It might affect oil prices set for China and India which could create a bit of a problem. It looks like ‘dumping’ is inevitable as Iran will definitely have stockpiles of oil it will need to sell. Iran is now switching to payments in currencies other than the dollar – the Japanese yen, the Indian rupee, the Chinese yuan.”

This week, China and India reiterated their determination not to support the embargo. Japan is gradually changing its position, having initially yielded to pressure from the US. It has now asked, as an exception, not to be forced to cut its imports from Iran. South Korea has been dragging its feet over the decision, forced to choose between the political solidarity with its pushy overseas partner, and the country’s energy security. Unlike Tokyo and Seoul, Ankara was quick to reject the pressure from the US without hesitation. Analyst Stanislav Tarasov comments.

“Turkey’s position is purely pragmatic. It is well aware that Europe is going through a depression and that cutting Iranian oil imports would only make things worse. Iran is Turkey’s main partner, accounting for half of its oil imports. Ankara won’t find any alternatives to Iranian supplies among Arab countries from which it is trying to distance itself. And Iranian oil offers it freedom to act as it pleases. Turkey is simply being sensible about the issue. A primitive political game is under way aimed at forcing Iran into joining six-party talks on its nuclear program. This game testifies to the deteriorating quality of western diplomacy. The problem is that the moment Turkey completed its mediatory mission to obtain Iran’s consent to a meeting with six-party representatives in Istanbul, the West started ‘torpedoing’ the talks.”

Islamabad will take part in a project to build a gas pipeline from Iran to Pakistan despite the threats of the imposition of international sanctions, the Pakistani Foreign Ministry announced on Friday.

In commenting their stance on the issue, Islamabad insisted that international sanctions should be limited to Iran’s nuclear program and should not affect Islamabad because of its participation in a gas project with Iran.