Iran makes 2014 World Cup!

Iran beats South Korea in World Cup Qualifier, 1-0

South Korea's defender Kim Chang-Soo (back) competes for the ball with Iran's midfielder MasoudShojaei during their World Cup Asian qualifier match in Ulsan, southeast of Seoul, on June 18th, 2013. Iran went on to win the match, 1-0. Asian giants Iran, South Korea and Australia have now secured spots for the 2014 World Cup.

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)

Iran Oil Exports Remain at 1 Million bpd

Iran is exporting an average of 1.084 million barrels per day of crude oil in July, little changed from 1.094 million bpd in June. Sales to China accounted for more than half of Iran’s oil exports, after China increased its imports to a record high (Reuters). Last year, Iran exported an average of 2.2 million bpd. 

Meanwhile, South Korea is reportedly ready to resume oil imports form Iran. The country halted shipments earlier this month because of European Union's ban on insuring tankers carrying Iranian crude and might now use Iranian tankers instead. The South Koreans did not disclose details on when the imports may start or the volumes involved. But they have said before that they want to stay within the limits allowed by U.S. sanctions.


Meanwhile, OPEC said today that  its reference crude oil basket rose to $101.47 a barrel on Thursday from $100.21 the previous day (Reuters). The basket includes 12 crudes from member countries, including Iran Heavy.  

South Korea Cuts Iran Oil Imports

In anticipation of next week’s deadline for expanded US and EU sanctions on Iranian crude trade, South Korea cut its oil imports from Iran by nearly 40 percent in May, Reuters reported today. The country imported an average of 127,880 bpd last month, compared with its term agreements with Iran to import 200,000 bpd.

South Korea's refiners SK Energy and Hyundai Oilbank import Iranian crude. Sources told Reuters that both refiners will stop importing from Iran when the EU insurance embargo takes effect from July 1.

Investing in Asia – A New Paradigm for Iran

Cash Trapped in India, South Korea and China Turned into Investment. A Historic Opportunity for Iran

By Nader Uskowi

The International Monetary Fund (IMF) reported this week that Iran's economy is growing by 3.2% in 2011. The positive assessment of the Iranian economy reversed IMF’s own prediction of 0% growth made in April. IMF identifies a recovery in agriculture during rising food prices across the globe and higher oil prices as the main factors in the growth of the country’s GDP.

The IMF praised Iran's subsidy reforms, implemented by President Ahmadinejad in December 2010, which resulted in the removal of nearly $60 billion in annual product subsidies, equivalent to 15% of GDP. I have been an early and strong supporter of Ahmadinejad’s subsidy reform program. It will spur additional GDP growth in the coming years.

The publication of the IMF report coincided with other published reports indicating Iran’s serious problems in colleting payments for its crude oil sold to its major Asian customers. This blogger understands that nearly $30 billion of the country’s cash is trapped in India, South Korea and China due to inability of those countries to transfer those funds to Iran because of US banking sanctions. But this problem can be turned into a historic opportunity for Iran. Let me explain how.

In the past six years or so, in writings and in discussions with the country’s senior economists and policy makers, I have argued that Iran could not afford to regard its oil revenues as the never-ending hard currency source for its budgetary needs. Iran needs to invest a significant portion of those revenues, generating income, with the government receiving its share by taxing the income so generated. The investments, I have argued, should include foreign investment. Now that considerable amounts of the country’s cash are trapped in major Asian markets, and in spite of that the country’s economy is growing at a healthy rate, as indicated by the IMF report, the Iranian government should turn these oil payment problems into a historic opportunity to start major investments in India, China and South Korea, in the tune of $30 billion as a starter.

To be successful, Iran needs to find a niche for its investments that would be common in those three countries. I believe automobile industry is the solution. Iran is already having success with its domestic car production. It can use nearly $5 billion in cash it now has in South Korea as the initial investment in a major Korean car manufacturing to gain added technology needed in today’s automobiles. It can use its nearly $7 billion cash in India and reportedly nearly $20 billion in China to start joint ventures with the local automobile producers to build its brands in the two countries that will be growing for years to come, with families getting rich enough to purchase multiple new cars. The profits generated could be reinvested in these projects with huge implications for Iran’s growing market shares in the fastest growing industry in top two fastest growing economies. This would be a new paradigm for the country, a historic opportunity that the government should not miss.