Monday, 27 February 2012

Iran cuts British, French exports

The Ministry of Petroleum confirmed on 19 February that Iran has cut oil exports to British and French firms in line with the decision to stop crude supplies to Europe. The stoppage came as no surprise to analysts, particularly after an earlier speculation that exports would be halted to six major European countries.

Ministry spokesperson Alireza Nikzad-Rahbar asserted, 'We have our own oil customers and replacements for these [British and French] companies have already been chosen and we will sell the crude oil to new customers.' This follows an earlier announcement by Petroleum Minister Rostam Qasemi that Iran was planning to cut oil exports to 'hostile European states' in an effort to pre-empt a EU embargo due to come into force in July. The minister also emphasised that Tehran had no intention of putting the European people under pressure during winter.

The move should be treated primarily as a media manoeuvre meant for domestic consumption. Britain and France are not the main consumers of Iranian oil and Iran will lose its clients in Europe within the next few months in any event.

The Majles earlier pushed for legislation to pre-empt the European Union's embargo in order to deprive European states of time to find substitute sources of oil, a move that would have affected the economically weak countries of southern Europe. But the Ministry is believed to have been against the move on the grounds that it would harm Iran more than Europe. It is not clear yet which countries will be Iran's new customers, amid signs that some non-Western customers, such as Japan and South Korea may also reduce their oil imports from Iran.

Qasemi's comments also contained a hint that things could soon get trickier. He noted that Iran had not yet resorted to barter deals in the face of difficulties over financial transactions, but 'if one day it is deemed necessary, it will not be a complicated issue.' But so far, he said, oil revenues have been transferred into the country by 'different ways' and 'numerous friends.'

For more news and expert analysis about Iran, please see Iran Strategic Focus.

© 2012 Menas Associates

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