Sunday, June 24, 2012

China resumes buying Iranian oil

China got what it wanted out of Iran - crude oil materially below market price. Their strategy of isolating Iran helped convince the desperate nation that China and India are its only large customers, but Iran needs to agree to significant price concessions (see this post). Now after using the sanctions to get the concessions it needs, China is back buying Iranian oil. 
Reuters: - China's crude imports from Iran recovered in May to offset a first-quarter plunge in shipments to nearly half the annual average, after the two nations resolved a wrangle over the terms of annual oil sale contracts
When it comes to resources, China is all about business.
China Daily: - A spokesman for China's Foreign Ministry said Thursday that the country's oil imports from Iran are "fully reasonable and legitimate," and do not violate any relevant UN Security Council resolutions.

"China's importing of Iranian oil is based on its own economic development needs," spokesman Hong Lei told a daily news briefing. "This is fully reasonable and legitimate."

Hong made the remarks when asked whether China is moving to cut its imports of Iranian oil in a bid to seek exemptions from new US sanctions.

Stressing that China has repeatedly expressed its position on this issue, Hong said China is always against one country imposing unilateral sanctions on a certain country, and "it is even less acceptable for such unilateral sanctions to be imposed on a third country."

"China's imports do not undermine the interests of a third party, nor do they go against any relevant UN Security Council resolutions," Hong said.
This will give Iran some temporary relief and some staying power when it comes to the ongoing nuclear negotiations, but will do little to stem the nation's slide into a depression.
Washington Post: - The revenue loss from falling imports amounts to about $4.5 billion a month [see this post], a financial wallop that comes on top of other economic pressure from Western sanctions targeting Iranian banks and key industries, said Cliff Kupchan, a former State Department official who is an analyst on Iran for the Eurasia Group, a consulting firm.

The effects have rippled across the Iranian economy, driving consumer prices up by 40 percent. At the same time, the 50 percent drop in the value of the rial, Iran’s currency, has put many imported goods out of reach for average Iranians, and Kupchan said currency traders are bracing for the broader sanctions set to take effect next month.
In the mean time Iran will attempt the "wag the dog" strategy to hold back any domestic unrest.
FARS News Agency: - "Like the arrogant powers that are present near our marine borders, we will also have a powerful presence close to the American marine borders," Sayyari said, addressing a ceremony marking the 31st anniversary of the start of the 1980-1988 war with Iraq.
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