China, India plan Iran oil cuts of 10pc
Beijing, February 21, 2012
China, India and Japan are planning cuts of at least 10 percent in Iranian crude imports as tightening US sanctions make it difficult for the top Asian buyers to keep doing business with the Opec producer.
The countries together buy about 45 percent of Iran's crude exports. The reductions are the first significant evidence of how much crude business Iran could lose in Asia this year as Washington tries to tighten a financial noose around Tehran.
The cuts would add to a European Union ban on Iran oil imports, which comes into effect on July 1, to restrict the flow of vital foreign exchange to Tehran under pressure over its nuclear programme.
Japan is close to an agreement with Washington on the size of cuts needed to win waivers from the US sanctions, two ministers said. The Yomiuri newspaper, citing unidentified sources, said the two sides would settle on an 11 percent cut.
The Indian government is pushing its refineries to cut imports by at least 10 percent, two sources said. India has said it will not abide by US unilateral sanctions, so its response could indicate the increasing uncertainty of doing business with Iran.
China's Unipec, the trading arms of Sinopec Corp, is likely to cut imports by 10 percent to 20 percent under 2012 supply contracts, a Chinese industry executive with direct knowledge of the deal said.
China had already cut back sharply on Iran crude purchases in the first quarter of 2012 while it haggled over full-year supplies contracts. Taking those cuts and planned purchases by China's only other major importer -- Zhuhai Zhenrong Corp -- into account, Reuters calculates China's total cuts this year will amount to about 14 percent.
In a further blow to Tehran, East Asian purchases of Iranian fuel oil is set to slump to a six-month low in March, according to comments from Singapore-based oil traders and an examination of shipping reports.
US financial sanctions imposed since the beginning of this year are playing havoc with Iran's ability to buy imports and receive payment for its oil exports. Washington is pushing ahead with the sanctions because it fears Iran might use its nuclear programme to develop nuclear weapons.
The European Union has imposed an oil imports embargo on Iran. In response, Tehran ordered a halt of oil sales to Britain and France.
Iran, the biggest producer in the Organization of the Petroleum Exporting Countries after Saudi Arabia, denies Western suspicions that its nuclear programme has military goals, saying it is for purely peaceful purposes. - Reuters