Wednesday, 22 August 2012

Sanctions bite Iran as Asian Oil Market offer relief

The planned visit by Manmohan Singh, the first by an Indian prime minister in more than a decade, puts into sharp relief the sanctions-easing strategies by Iran — and the political complexities for Washington that limit its pressure on Asian powers needing Tehran's oil. Tehran tries to offset the squeeze from Western oil sanctions by courting energy-hungry Asian markets.
Oil purchases by India, China and South Korea — which decided to resume Iranian imports — have not covered Tehran's losses after it was tossed out of the European market in July. But they have given Iran a critical cushion that brings in tens of millions of dollars in revenue a day and means that Iran has dropped only one ranking, to stand as OPEC's third-largest producer.
The U.S. has pressed hard for Iran's top customers — China, India, Japan and South Korea — to scale back on crude imports, with some success, offering in return exemptions from possible American penalties. But Washington cannot push its key Asian trading partners too fast or too aggressively and risk economic rifts. Still, it's clear the U.S. is unwilling to risk trade wars with key Asian trading partners, even over the showdown with Iran.
For Iran, however, there's a parallel fight: Trying to keep the oil flowing to its key Asian customers, possibly through deals to sell at below-market prices.

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