The foreign minister of France said he could only smile.
Britain doesn’t buy any Iranian oil and France only buys a token amount.
Published figures show Britain imported no Iranian oil last year from January through September. The trade figures from September and later have not yet been posted.
The figures showed France had imported Iranian oil to meet just 3 percent of its needs—58,000 barrels day—in that time period, but Total, France’s largest oil firm, announced last month that it had already stopped buying Iranian oil.
Published reports said buyers all across the EU had already slashed their purchases of Iranian oil by two-thirds and that Iran was not so far able to nail down alternative buyers.
Oil Minister Rostam Qasemi announced the halt in sales to Britain and France as punishment for leading the effort to have all 27 EU countries stop buying Iranian oil.
His deputy, Ahmad Qale-bani, who is the managing director of the National Iranian Oil Co., threatened Monday to cut off sales to Greece, Italy, Spain, Portugal, Germany and the Netherlands. He gave them an ultimatum: sign two-to-five year purchase agreements with Iran or see their sales cut off.
But all those countries, as EU members, have already agreed to phase-out Iranians oil purchases completely by July 1, just four months away.
The only European country heavily dependent on Iranian oil last year was Greece, which got about 34 percent of its crude from Iran and took 18 percent of all the crude that entered he EU. But Greece’s two biggest refiners both said they didn’t care if Iran cut them off. A spokesman for the largest, Hellenic Petroleum, said, “The Hellenic Petroleum Group will adjust to the new conditions and will cover its crude needs from alternative sources.” Motor Oil, the country’s second biggest refiner, said it didn’t see any problems getting crude elsewhere.
The issue for Greece, given its economic morass, is credit terms. But the EU is assumed to be helping the Greeks over that hurdle so it won’t complain about the shutoff of Iranian crude, which was reportedly sold to Greece on very easy credit terms.
Marlene Holzner, energy spokeswoman for the European Commission, said Austria, Portugal and Britain all stopped buying Iran crude more than a year ago while the Netherlands, Belgium and the Czech Republic have stopped Iranian crude buys in recent months. (Portugal was one of the countries Qalebani threatened Monday to cut off.)
Ever since the talk of severing oil links with Iran began, much of the European media has been in a frenzy, talking as if it would be very hard to find other suppliers for 450,000 barrels a day of Iranian oil and even then many refiners would not be able to process a different kind of crude. The media was also predicting soaring prices.
But ENI, Italy’s largest oil firm scoffed at that. Managers pointed out that last year Libya’s oil production went from more than 1.5 million barrels a day to almost zero. Most of that oil went to Europe and much of it to ENI. But the firm pointed out that it got adequate supplies elsewhere with ease and that its refineries quickly adjusted to refining lower qualities of crude. Prices also remained remarkably stable all through last year, as the monthly price chart published weekly on Page Five of the Iran Times shows.
The European Commission also brushed aside Iran’s announcement. It pointed out that EU countries have a back-up stock of crude oil equal to 120 days of imports—imports from all countries. The stock could cover 4 1/2 years worth of imports from Iran alone. The implication was that if any country had a problem finding a new supplier for a few months, the stocks would easily tide it over.
The spokesman for the Iranian Oil Ministry, Ali-Reza Nikzad, posted a statement Sunday saying, “Exporting crude to British and French companies has been stopped.… We will sell our oil to new customers.”
The announcement failed to say how much oil was being shifted from British and French companies to new customers or who those new customers were.
Most media mistook the announcement as saying Iran was halting sales to Britain and France. But it said “British and French companies.” Those companies carry crude to many other countries, so if Iran really has cut off sales to “British and French companies,” that could actually harm smaller countries with a single refinery and a dependence on some British or French tanker firm to provide it with crude.
But all European tanker firms are already under orders from the EU to stop buying Iranian crude even for shipment to non-EU countries. For the past four weeks, they have been in the process of dropping those Iranian cargoes.
French Foreign Minister Alain Juppe just rolled his eyes at Iran’s announcement. “Undoubtedly, Iran is very imaginative with regard to provocation. It is not Iran that decided to cut off its deliveries; we are the ones who decided to terminate our orders,” Juppe said, adding, “It makes one smile.”
The Iranian media, however, kept up a drumbeat of reports about how damaging the cutoff of Iranian deliveries to EU countries would be. A number of Majlis deputies have been quoted as saying that Europe cannot survive without Iranian oil.
PressTV also found two obscure Italian senators from minority parties—Francesco Ferrante of the Democratic Party and Stefano Saglia of the People of Liberty Party—who bewailed Italy’s fate, saying it would suffer terribly from the end to Iranian crude imports.
Iranian officials have been saying that the immediate cutoff of crude supplies would be a suitable riposte for the EU action. They have said Europe will suffer if it doesn’t have time to find alternative suppliers. But when Majlis deputies started pushing such a bill, that legislation was pulled. Reportedly, oil officials were saying Iran itself might suffer from a swift cutoff because it would not have the time to find alternative buyers.
And the Financial Times of London reported Sunday that Iran was struggling to find new buyers. It quoted one industry executive as saying, “Iran is facing severe problems finding a new buyer.” He said Iran was refusing to offer a discount for its crude.
Carsten Fritsch, an analyst with Commerzbank, told Agence France Presse, said his sources told him EU oil companies had already slashed their buys of Iranian oil by almost two-thirds—from 480,000 barrels a day last year to 180,000 barrels a day in March.
The cutoff of sales to non-buying British and French firms seemed to be the ideal solution for Iran. The Islamic Republic could have its cake and eat it too—bragging rights about punishing Europe without having to worry immediately about finding new buyers. Many thought the cutoff may also have been intended as a threat to other countries that might be thinking about phasing out Iranian crude.
The bottom line is that Iran has been exporting 2.5 million barrels a day while Saudi Arabia has unused capacity to pump an additional 3.5 million barrels a day, which it has said it will pump if buyers come to it.
In addition, Libyan oil is rapidly coming back on the market. It rose from a mere 90,000 barrels a day last September to 1.0 million barrels a day in January. Before long, it should be back up to its pre-revolutionary output of 1.58 million. Other countries, such as Angola, also have newly developed fields expected to come on stream this year.
China, meanwhile, rebuked the Islamic Republic for stopping sales to British and French firms. It earlier criticized the EU for its sanctions so China was being consistent.
