Iran and oil

[youreyes]

In the first place, there are no UN sanctions banning the purchase of oil from Iran. These are US and EU sanctions. The US ones contain explicit exceptions for certain US friends, including Japan, South Korea, China, India, Singapore, etc., provided they curtail their purchases of Iranian oil and pay a cut rate.

so what prevents Russia from buying Iran's oil? its not part of EU...

[Billy T]

so what prevents Russia from buying Iran's oil? its not part of EU...

Russia is an oil exporter, at times, a couple of years ago the world´s largest. Why would they buy oil from any anyone?

[quadraphonics]

so what prevents Russia from buying Iran's oil? its not part of EU...

Apart from not needing to import oil, one fact that seems largely ignored in the West is that Iran and Russia are actually strategic competitors in the Caspain Sea oil politics, and Russia likewise has no interest in nuclear proliferation, so Russia is happy enough to see Iran get knocked down a few pegs. Russia would oppose Western military intervention in Iran, but that doesn't mean they want a particularly strong or independent Iran, and they are more than happy for the West's strategic attention to be focussed on the Middle East instead of closer to their country.

[fedr808]

In theory one of the last US sanctions against Iran (whether it passed or not I'm not sure) made it so that if anyone does business with Iran then they are blacklisted from doing business with US banks, and considering how pervasive the US banking system is worldwide that means a death sentence for many economies, and a serious penalty on the rest.

[Billy T]

... US sanctions against Iran ... made it so that if anyone does business with Iran then they are blacklisted from doing business with US banks,...that means a death sentence for many economies, and a serious penalty on the rest.

That may be true in a way you don´t intend. I.e. a serious new blow to the current PetroDollar* financial system. Note, Iran is exporting more oil this month than the monthly average of last year and entering into a new lucrative financial field. (Supporting data given in post 18.) Buyers of oil are increasing their demand and the supply of cheap oil, like Iran has, is now rapidly deceasing. I.e. the sanctions are just demonstrating the old truth: Where there is a will (to buy) there is a way (to buy).

US is a net exporter of refined oil products. Although, none of it has gone to Iran for many years, Iran has been buying refined product and than has helped hold up the price of US´s exported product. In a few years, thanks to the two new and large oil refineries, that China is building in Iran for the oil Iran is shipping to China, the demand for refined product will be less or at least not grow as rapidly as it would if these new refineries were not built. Also several other countries that now export crude and import refined product are building refineries too. Brazil and Venezuela are each building two, all of the same shared design, for refining their heavier crude. (One in each country is 40% owned by the other country.) When all 6 of these new refineries function the US will have less sales of refined oil and I think there are others under construction too.

But the main point I make is that the sanctions are accelerating the efforts of many countries to conduct their trade with no use of the current financial system.** - Accelerating the decline of the US dollar as the only currency for international trade settlements. I.e. the PetroDollar System is dying and it has been the reason Americans could live the good life, way beyond their means, paying for goods and services, not only by producing goods and service like other nations must do, but in large part paying with printed paper.

* I.e. the west buys oil from OPEC (and others) with dollars and they "recycle" the dollars to finance western, especially US, deficits. Iran and Kuwait are now taking payment in gold too, instead of exclusively in dollars. IMHO, the PetroDollar System, and with its end, confidence in the dollar will be dead in less than a decade.

** China has made "currency swap" agreements (or their equivalents) with many other countries, including Japan, Russia and India*** and all of the BRICs, plus a couple of dozen smaller Asian countries to cease using dollars for trade. All five of the BRICs (S. Africa is now one) have agreed to accept each others currencies instead of dollars for trade settlements, etc. I´m not sure about non-dollar use, but know that S. Korean has China as its main trading partner, instead of the US, and I think that trade is without use of dollars too.

BTW Venezuela last week became an official member of MERSUL - the quasi-free trade agreement between many South American countries ("quasi" as each, especially economically troubled Argentina, has long list of products not included.) Thus, China´s currency swap with Brazil really indirectly extends to most S. American countries for most products China exports there. China now sends more cars to Brazil than the US does and those exports are so rapidly growing that discussions are well under way for China just ship the car parts to its new assembly factory in Brazil to make jobs in Brazil. China has done that for years with the bicycles sold to Brazil as the import duty on all the parts of a bicycle is much less than on the assembled bicycle - that makes jobs in Brazil too.

*** India, which always had a chronic trade deficit with China, got that fixed too. China has agreed to buy from India 100 billion dollars worth of goods and send it only 100 billion dollars worth annually so their trade is balanced and India will produce with local jobs some goods it formally imported from China.

[Billy T]

More on post 25, graphically:
Note Turkey is paying with gold.
more at: http://blogs.ft.com/beyond-brics/201...problem-is-it/

[Billy T]

".. Opening the Non-Aligned Movement (NAM) meeting in Tehran, Foreign Minister Ali Akbar Salehi said he hoped for a show of solidarity against sanctions the West has imposed to punish Iran for its nuclear activities. "The non-aligned (movement) must seriously oppose ... unilateral economic sanctions which have been enacted by certain countries against non-aligned countries," Salehi told the summit's opening session.

Western diplomats have sought to downplay the importance of the summit and the start of Iran's three-year presidency of NAM, a body set up in 1961 to counter big power domination of international relations. But 80 countries are participating in the summit at the level of minister or higher, Foreign Ministry spokesman Ramin Mehmanparast said, with 50 sending their heads of government.

And the expected attendance of big players including U.N. Secretary General Ban Ki-moon and Egypt's new president, Mohammad Mursi - the first Egyptian leader to visit Iran since the 1979 Islamic revolution - will give the meeting diplomatic heft. Since the toppling of Egypt's Western-backed President Hosni Mubarak last year, non-Arab Iran has hoped for a thaw in relations with the regional power, but Cairo has appeared less eager to embrace Shi'ite Muslim Iran which is viewed with suspicion by its Sunni Gulf Arab neighbours.

"The presence of the Egyptian president in Tehran will help develop Tehran-Cairo relations," Mehmanparast told reporters. .."

Iran is one of three or four nations now accepting gold instead of dollars for its oil. The "PetroDollar" system, which recycled the dollars back into US bonds, seems to be dying.