India to Cut Iran Oil Imports by 10-15 Percent in 2013

Reuters reported today that the government of India plans to cut Iran oil imports by 10 to 15 percent in the 2013/14 fiscal year. A government official tells Reuters that the cuts will be even deeper if Iran does not lower prices to help cover higher costs resulting from Western sanctions. The Times of India featured Reuters story on its front page.

“Next year our imports will be 10 percent to 15 percent less than this year,” said the unnamed government official. “If they don't cut prices, the decline will be substantial. Indian refiners have genuine problems with credit availability.” (Reuters/The Times of India, 19 December)

The report from India follows an announcement by Japan’s top refiner that the country's crude oil imports from Iran would be about 15 percent lower next year. South Korea has also announced a 20 percent cut in Iran crude imports. China has not yet announced its plans for 2013 imports, but its Iran imports in 2012 were down by 22 percent.

China, India, Japan and South Korea are respectively the largest clients of Iranian crude. 

Iran Denies Missile and Nuclear Cooperation with North Korea

Iran today denied South Korean and Japanese reports that its military personnel and missile experts were in North Korea participating in a planned launch of a long-term rocket and strengthening cooperation in missile and nuclear developments.

“The claim made regarding missile and nuclear cooperation (between Iran and North Korea) is baseless propaganda and they are trying to create fear so they can undermine our relations with others,” said Ramin Mehmanparast, Iranian foreign ministry spokesman. (IRNA, 11 December)

On Monday, South Korea’s Chosun Ilbo newspaper said a group of Iranian missile experts was in North Korea “offering technical assistance for the planned launch of a rocket which Pyongyang terms a peaceful mission.” (AFP, 11 December)

Earlier this month, Japan’s Kyodo News Agency had quoted a Western diplomatic source as saying Iran had stationed defense personnel in North Korea since October “to strengthen cooperation in missile and nuclear developments.” (AFP, 11 December)

Iran’s Oil Exports Estimated at 824,000 bpd – New Low

Iran’s oil exports for the month of December are projected to be as low as 824,000 barrels per day in December. Iran sold 1.08 million bpd in November. Declining imports by China and India are the main reasons for the new low volumes.

China’s imports this month are estimated at only 242,000 bpd, a new low. In November, China purchased an estimated of 382,000 bpd. And in the period of January-October, China’s imports averaged 426,000 bpd, a figure already 22 percent lower than in 2011.

India’s loading for December is estimated at 119,400 bpd compared with 275,000 bpd in November. India’s Jan-Oct average was at 328,000 bpd.

Because of sanctions, China, India and South Korea are unable to secure insurance for tankers carrying Iranian crude. They are asking Iran ship the oil, but delivery has often been delayed as the Iranian fleet is stretched with many tankers being used as floating storage for rapidly rising volume of unsold crude. Japanese importers use their government guarantees to self-insure their tankers.

Iran’s other major clients are South Korea and Japan. South Korea’s imports in December are estimated at 200,000 bpd, in line with their purchases this year, but half their volume in 2011. Japan will import 186,000 bpd in December, an increase over November. Japan has cut imports each month in 2012 by more than a quarter.

The total volume of imports by the four Asian countries in December is estimated at 747,500 bpd, more than 30 percent lower than its average in the first 10 months of the year. 

The U.S. is due to decide next week on whether to renew 180-day waivers from sanctions for importers of Iranian oil that have progressively cut purchases, at a suggested rate of 18 percent in each six-month period.

Photo credit: Iran’s Kharg Island Oil Export Terminal. (Getty Images)

US Exempts Japan, 10 EU Countries from Sanctions

India, China Exposed – India to Export Wheat for Oil

The US government has given the banks in Japan and 10 EU countries a six-month retrieve from financial sanctions for processing payments for Iranian crude imports through the Central bank of Iran (CBI). The exemptions were granted because those countries have significantly cut purchases of Iranian oil in the past few months.

The decision leaves China and India, Iran’s top oil customers, exposed to US sanctions. The full sanctions against the CBI goes into effect at the end of this month. Countries purchasing Iranian oil need to process their payment through the CBI. The sanctions against the CBI are designed to significantly cut Iran’s oil exports.

Meanwhile, India’s Economic Times reported today that India is considering exporting wheat to Iran, in essence bartering wheat for oil, so to avoid processing payments through the CBI. In this scheme, India will deposit payments for Iranian crude purchases in rupee bank accounts set up for Iran in New Delhi and Iran in turn use these rupee accounts to pay for wheat and other imports from India. The problem is that the value of Iranian oil exports to India far surpasses that of its imports, even with if the wheat agreement is finalized. India currently has huge stockpiles of grains after bumper harvests.

Iran Denies China and Japan Have Cut Oil Imports

Iran’s sate oil company NIOC is denying that China and Japan have sharply cut imports of Iranian crude. The company’s international affairs director said today in Tehran that China has not decreased imports and Japanese refineries have extended their contracts with NIOC until the year’s end.

“China (has) not decreased (the imports) at all… and all of the contracts between Japanese refineries and NIOC have been extended until the end of the year,” said Mohsen Qamsari, NIOC’s international affairs director [Mehr News Agency, 2 May].

However, China's customs figures showed March imports of Iranian oil had fallen by more than half to between 220,000 and 280,000 barrels per day, according to Dow Jones Newswires. And the data from Japan's Ministry of Economy, Trade and Industry showed that Japan imported 36 percent less oil from Iran in March 2012 from a year earlier [Press TV, 2 May].

“Oil exports to Chinese and Japanese refineries in the current year have not decreased at all,” Qamsari insisted. 

Japan Cuts Iran Oil Imports by 77 Percent

Japan is slashing its crude oil purchases from Iran by 77 percent in April to comply with new sanctions against the country that will go into full effect on 1 July, oil trade sources said today [Reuters, 18 March].

The Japanese refineries will purchase just 75,000 barrels per day (bpd) of oil from Iran in April, down by 250,000 barrels per day. The cuts are the steepest yet by the four Asian nations who buy most of Iran's 2.2 million bpd of exports. The tightening sanctions make it difficult to pay, ship and insure the Iranian oil.