Sanctions on Iranian Oil Customers
In the first 6 months of 2018, India has imported about 550,000
barrels of oil from Iran on an average daily basis.
China is the largest buyer of Iranian oil, accounting for more than 40
percent of Iran’s oil exports. However, Iran’s oil covers less than 10
percent of oil imports by the world’s largest oil importer. Energy
consultancy Facts Global Energy (FGE) believes that China is unlikely to
completely halt buying Iranian oil, although the possibility of reducing
import of 700,000 barrels of oil from Iran may encourage China to play with
the energy card of Tehran to get concessions from Washington.
In addition to geopolitical rivalries that shape the complexity of the
talks, China and the United States are very important trading partners.
Therefore, it is not only hard for Washington to impose sanctions on China
but a trade agreement on controversial tariffs can also persuade China to
cut oil supplies from Iran.
India also has a large share of Iranian oil imports so that New Delhi and
Beijing are the most important targets of Trump for negotiations. While
China has an economic and political conflict with the United States, the
government of Narendra Modi has been successful in not infuriating Trump,
although economic pressure on Indian consumers could change the situation.
In the first 6 months of 2018, India has imported about 550,000 barrels of
oil from Iran on an average daily basis. India’s oil minister said in a
meaningful speech that India continues to rely on Iraq as the main oil
supplier. Iran is the second largest oil exporter to India, but New Delhi
has cut its oil import from Iran by one quarter in the past year. Only in
May, India’s oil purchase from Iran dropped by 16 percent. At the same time,
the US has increased its oil exports to India to make things easier for New
Delhi. The increase registered a record in June and was doubled in the past
Iran’s third largest purchaser of oil in the first half of 2018 was South
Korea. The Asian country buys about 220,000 barrels of oil per day from
Iran, which has a long way to go to reach India and China, but the figure is
still significant. However, after a drop of 179,000 barrels in May, which
was the lowest purchase from Iran since January 2016, it stopped purchases
in July. In the meantime, South Korea has quadrupled its oil imports from
other Asian countries at this juncture of 2018, indicating that Seoul too
has plans like New Delhi.
The next buyer of Iran oil is Italy. Although Italy is not a signatory of
the Joint Comprehensive Plan of Action but like other European states it is
an advocate of the JCPOA. The “boot” of Europe, which imported about 180,000
barrels of oil a day from Iran in the first six months of 2018, has said it
is committed to economic relations with Tehran. It is unlikely for Italy to
close its relations with Iran as long as the European signatories of JCPOA
support Iran’s oil exports, however, in the month of July Rome did not make
any purchases from Iran.
The fifth largest buyer of Iranian oil during the above-mentioned period was
the neighboring country, Turkey. Turkey’s purchase is several thousand
barrels less than Italy, but Ankara has officially announced that it will
not reduce its trade relations with Iran due to Trump’s positions and
threats. Of course, Turkey lowered its purchases in May, but has informed
Washington several times that it would not undermine its ties with Tehran.
Replacing Iran’s oil is difficult for Turkey because not only Ankara needs
others for almost all of its oil imports but in the first quarter of 2018 it
bought about half of its oil from Iran.
Another important customer of Iran is Japan, which in the first six months
of 2018 as the sixth buyer of Iranian oil, imported nearly 150,000 barrels
daily. Japan announced last week that it was seeking to be exempted from
Washington’s sanctions on Iran. One of Japan’s top officials has said this
is about energy security and the need for refineries. Japan, the world’s
third largest economy, has the power to encounter or get concessions from
Washington, but firstly, the US exercises great influence on Tokyo, and
secondly everything depends on future developments.
The seventh, eighth and ninth purchasers of Iranian oil are Spain, France
and Greece, respectively. The first two countries buy about 100,000 barrels
and the last one purchases about 70,000 barrels per day. Iran has other
customers which together buy about 210,000 barrels per day. The problem here
is that even if all these countries refuse to give up to Trump’s unfair
demand and those who give in maintain part of their purchases, there would
still emerge serious troubles for the Iranian economy. If Saudi Arabia and
its allies fail to sustainably increase their production in order to capture
Iran’s market share, and in the face of the resistance of countries such as
China or other arrangements made by Iran, it was not possible to completely
cut off Iran’s oil exports, it would not be difficult to inflict another
blow on the Iranian economy. If we take into account the positions taken by
the said countries and their share of oil imports and exports it seems that
diplomacy would help more the Iranian economy that has just come out of the
sanctions. The alarm coming out of statistics and statements must be taken