Big customers cut back
While countries such as Turkey and South Africa appear to have ramped up imports from Iran ahead of the July 1 sanctions deadline, some of Iran’s biggest customers, including Japan and South Korea, have been gradually reducing Iranian crude imports. Europe has cut its imports from Iran to less than half its earlier level of 700,000 barrels a day.
In addition, India has trimmed its oil purchases from Iran, which last year covered 10 percent of India’s oil consumption. During her visit there last week, Secretary of State Hillary Rodham Clinton pressed India to further reduce its oil imports from Iran.
Members of the Organization of the Petroleum Exporting Countries are filling in the gap. Motivated in part by high world oil prices, OPEC crude supply in April rose 410,000 barrels a day, with Iraq, Nigeria and Libya providing about 85 percent of the increase, according to Friday’s report.
Saudi Arabia’s crude oil production in April was unchanged at the relatively high level of 10 million barrels a day, but the IEA report said the kingdom has been offering price discounts for its Arab Light crude, which is widely sold to Asia. That could encourage countries such as China to shun Iranian oil.
“They can’t move the stuff, and they’re really hurting,” said a senior State Department official with access to intelligence on Iran’s oil shipments. He spoke on the condition of anonymity because he was not authorized to speak publicly about the matter.
Analysts warned, however, that Iran might have an easier time selling its oil during the third quarter of the year, when global oil consumption usually peaks. At this time of year, many refineries take advantage of relatively slow oil use to close for maintenance.
The GPS tracking systems on Iran’s sea-going tankers are required under international law as a safeguard against accidents and spills, and ship captains are allowed to shut them down in only a handful of circumstances, such as when navigating waters known to be frequented by pirates.
Vessels are easily tracked
U.S. officials dismissed the Iranian tactic as ineffective, noting that Western spy satellites and other surveillance systems are easily able to track large ships on the open seas, even with the GPS turned off. The practice, begun in early April and noted at the time by a Reuters news agency report, has continued, reflecting a determined, if ultimately ineffective, effort to circumvent sanctions, the officials said.
Some — and perhaps all — of the marooned oil will eventually be sold, U.S. officials acknowledge, as oil traders seek to make a quick profit on deeply discounted Iranian crude. But with global prices edging down in recent weeks, Iran may have to settle for far less than the world market price, the State Department official said.
Iranian officials are expected to press for relief from sanctions at this month’s nuclear talks. The United States and its allies will insist on commitments from Iran to rein in its nuclear program and come clean about what Western governments say were past secret research efforts by Iranian scientists to design nuclear warheads.
The Associated Press on Sunday published a computer-generated drawing of what it said was an Iranian explosives containment chamber of the type needed for nuclear-arms-related tests. The U.N. nuclear watchdog, the International Atomic Energy Agency, has long alleged that Iran used such a chamber to test detonators for potential use in a nuclear weapon. Iran has denied ever seeking to acquire atomic bombs.
The wire service said the image was based on information supplied by an individual who had seen the chamber at Iran’s Parchin military site. The AP did not provide additional details, saying that doing so could endanger the informant’s life.