Iran and oil

Discussion in 'World Events' started by Michael, Jun 16, 2003.

  1. Michael 歌舞伎 Valued Senior Member

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    I was wondering: If the USA stops/significantly reduces its purchase of Iranian oil (say once Iraq’s oil is online) what do you think would happen to the Theocracy of Iran?

    Doesn’t it seem a bit ironic that the Theocracy’s economic survival may depend on the very same Great Satan they’re always prattling on and on is so evil?

    Lastly - Go Reformists!

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  3. BlueMoose Guest

    hmmmm

    They could sell it to the China insteadt ?

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    ?
     
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  5. Captain Canada Stranger in Town Registered Senior Member

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    Just a couple of corrective points:

    1. The US currently buys no Iranian oil. Under the Iran Libya Sanctions Act (ILSA) US companies are forbidden to trade with Iran (or indeed Libya).

    2. Iran currently happily sells its oil to Japan, China, Europe, India and other Asian countries.

    I kind of agree, but in a completely different way. The hardliners need a sense of being under siege from the US in order to keep the army and police on side and put down any opposition. Bush is happily obliging in this by ramping up the hostile rhetoric. US government actions in recent months have done nothing but strengthen the conservatives.

    I'm a supporter of the reformists, but the US isn't. They don't think Khatemi goes far enough in his commitment to re-establishing Iran as a regional power - specifically in terms of his attitude to US actions and Israel. He also commands increasingly less public support as he has been defeated time and time again by the hardliners which control the judiciary. He is both undermined by US hostility and US calls for reform. The reformists have been completely backed into a corner and sadly I see less and less chance of them emerginbg victorious (at least in the short term), but there is some hope. The army is actually wavering against the demnstrators as I see it and the country is on a knife edge. If Khatemi comes out on top though it will be despite US policy, not becuase of it.

    But if the US thinks the Shah is coming back, they're displaying a stunning lack of understanding once again. Iraq is simple by comparison!
     
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  7. nico Banned Banned

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    Just the facts!

    IRAN

    GDP:
    purchasing power parity - $456 billion

    GDP - real growth rate:
    5% (2002 est.)

    GDP - per capita:
    purchasing power parity - $7,000

    Population below poverty line:
    53%

    Exports:
    $24 billion f.o.b. (2002 est.)
    Exports - commodities:
    petroleum 85%

    Exports - partners:
    Japan 20.5%, Italy 7%, UAE 5.9%, France 4.7%, China 4.1


    Imports:
    $19.6 billion f.o.b.

    Imports - partners:
    Germany 11%, Italy 8.3%, China 6.1%, Japan 5.3%, UAE 5%


    No, I don't see the US as a "official" trade partner, but many US companies have buisness interests in Iran, Haliburton (big shock), GE, Exxon,etc.
     
  8. Captain Canada Stranger in Town Registered Senior Member

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    Halliburton opened an office in Tehran which was an elaborately set up entity to get around ILSA (not a suingle dime of US ownership). Think they're still there.

    Exxon and GE are news to me though. Do tell. There are some US lawyers who would love to get their teeth sunk into that one.

    I'd be interested to hear which US companies are breaking the sanctions (though ILSA only comes into effect at a $20m threshold - but you need a waiver with any investment lower than that). As far as I know there's not much happening.

    (an interesting aside - one of the big problems in Iran's oil sector is getting the industry standard software used for oil exploration and production work as well as refining and processing. It's all US copyright in the industry and the US will not licence it to Iran. Some bright sparks are trying to come up with alternatives, but it's tough. Exxon would love to get in there but are very wary, particularly after what happened in Kazakhstan...)
     
  9. kajolishot Registered Senior Member

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    627
    Yes, ideally.

    http://slate.msn.com/id/2080656/

    But not Haliburton or whatever they are called.
    They have deals in all the countries forbidden by the US for doing business. It helps to have relations in the CIA and the White house.
     
  10. nico Banned Banned

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  11. Tiassa Let us not launch the boat ... Staff Member

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    36,563
    Great link, Nico

    Absolutely wonderful link, Nico. Thanks.

    :m:,
    Tiassa

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  12. nico Banned Banned

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    Iran compared to other states in the ME and Central Asia is s a stable one. Granted it has many ethnic groups, but it is mostly Shi'a state, and thus stable. Luckly the country defined it's own borders for the most part. That is why Iran will always be a player that region especially when it comes to oil, now I am not sure how nationalistic Iraqi Shi'a's are but I would phatom not much. In the next 10 years or so, we will a movement of Iraqi's (S of Baghdad) wanting to join Iran in a formal union or actually joining Iran. Iran has enormous oil wealth:

    Iran :89.7 -99.1 billion barrels of oil.
    Iran : 812.3- 939.4 trillion cubic ft of natural gas.
    Iran : 3,724 million barrels a day.

    But Iran is looking for new markets mind you:

    http://www.gasandoil.com/goc/frame_cnm_company.htm

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  13. Michael 歌舞伎 Valued Senior Member

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    See nico's post from the US census bureau (nice link). I was thinking USA wheat -->Iran, Iranian oil --> USA (via 3rd parties) etc...

    So no one sees the USAs control of Iraqi oil as a significant threat to Iran's oil industry and thus economy? I suppose so long as the price remains around 20pbl Iran will do fine. If it drops to 15pbl they are going to have a problem. Anyway, having enormous oil wealth doesn't create jobs (see Iran, Indonesia, Saudi Arabia, etc..) and no jobs means pissed off Uni students .... Go Reformists!

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  14. Michael 歌舞伎 Valued Senior Member

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    Iran rejects tougher nuclear checks is the sort of reason I think the USA (under Bushy) is willing to really start pumping the Iraqi oil and thus push the price of oil down to pressure the Iranians so that they let in nuclear inspectors and such. (even with ~9% of the worlds oil it's only really worth pumping so long as they can sell it at ~17pbl). And Iran has a large number of young unempolyed Uni Students that keep leavign Iran because there is no work for them there. Some of my close friends are Iranian. None of them want to go back to Iran because there is less freedom and no work for them.

    I guess we'll see.
     
  15. Michael 歌舞伎 Valued Senior Member

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    I'm wondering if the price of oil doesn't dramatically drop over the next few months. Could it go to as low as $60 a barrel? Iran's b/w a rock and a hard spot and it's trading partners know it and will be punishing in terms of deal making.
     
  16. StrawDog disseminated primatemaia Valued Senior Member

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    3,373
    1.) Supply & demand. There will always be a market for Iranian oil.
    2.) The best & quickest way to undermine the theocratic system of Iran would be to normalise relations with the "International Community", lift sanctions and stimulate bi-lateral trade. The better folk live the less power the Ayatollas will hold, the less the Revolution will predominate in nationalist discourse and the more possibility of an internal process to a secular and true democratic system taking hold.
    3.) Currently Irans sells no oil to the US, so notwithstanding the many satans that abound, the growth market for Iranian oil is China & India not the US - there is no need for dependancy on the US market.
     
  17. quadraphonics Bloodthirsty Barbarian Valued Senior Member

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    If it is made illegal for most buyers to purchase oil from Iran, then there will be much less demand for Iranian oil, and Iran will not be able to charge very much for it. This has already happened.

    That's probably true - but outsiders cannot simply impose such a state of affairs unilaterally. Such would require the Iranian authorities to cooperate in that opening. And, as you note, they have a clear interest in doing the exact opposite. Always have.

    Oil is a fungible commodity, so global demand is what sets the price that Iran can charge (even if they only actually sell it to a few specific countries). Therefor, if you cut down global demand for Iranian oil, their buyers pay less and Iran's pocketbook suffers. Again, this has already occurred, so I'm unclear why you are citing theoretical reasons it will not occur.
     
  18. StrawDog disseminated primatemaia Valued Senior Member

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    3,373
    How would this potential "illegality" be enforced against China? Oil turns the wheels. Iran arrests oil export decline as China buys more
    Of course, but it is clear that currently a schism between Ahmadinejad and the Theocracy exists - this can be exploited by diplomacy & economic carrots. Of course as long as Israel is the special friend it won`t happen.
    If offered at bargain prices, the volume of sales to hungry clients will increase to offset margins.
     
  19. quadraphonics Bloodthirsty Barbarian Valued Senior Member

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    Same way as with any other country - refusal to reinsure tankers carrying Iranian oil, penalties for businesses that engage with Iran, etc. Although frankly it's more a matter of political cooperation than "enforcement." The USA has granted China an exemption from the oil sanctions on Iran, in return for China significantly reducing its purchases of Iranian oil. Likewise, China is interested in leveraging the scenario to squeeze a better price from Iran - so even if China still imports a lot of Iranian oil, they do so at a steep discount (as your article mentions) and Iran is left with that much less income.

    The point is to hit the Ayatollah's pocketbook, rather than to reduce the output of Iranian oil as such. If the West can arrange it so that China and India still get all the oil they want - at a discount! - and Iran still ends up bankrupt, then that's actually an even better outcome than completely shutting off Iranian oil exports (which would piss of China, Japan, India and Taiwan).

    Yeah, not really. Ahmedinejad has been sidelined. The real power was always with the Ayatollah.

    I don't believe that Iran has sufficient production capacity to make up the difference on volume. Even if they do, the net result is that they end up selling off their national birthright at firesale prices - still pretty disasterous.
     
  20. Michael 歌舞伎 Valued Senior Member

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    China and India have Iran over a barrel

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    IOWs the price of oil will probably be pushed down, at least in the short run. Not to mention that the world economy is slowing pace. I agree that change could better come through bilateral relations and fully support them. But, politicians needs them sum demagoguery and Iran's as good as any issue you could ask for.
     
  21. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

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    “… European Union sanctions against Tehran have stopped European insurers, who dominate the marine insurance sector, from offering cover on Iranian crude. But the lack of shipping cover has failed to disrupt the flow of Iranian oil to Iran's major customers in Asia - China, India, South Korea and Japan.
    An Iranian insurance official announced on Monday that the country has set up a domestic consortium to provide insurance cover for the oil tankers which carry Iran's oil for exports. … on Sunday, a senior Iranian official voiced Iran's preparedness to provide insurance cover for all foreign* and Iranian ships and oil tankers … "The sanction imposed by the foreign insurance firms made us launch Iranian insurance of P&I and this has been gifted to us by the sanctions," Managing-Director of the Islamic Republic of Iran Shipping Lines Mohammad Hossein Dajmar told FNA. …" Photo & text from:http://english.farsnews.com/newstext.php?nn=9104252075

    “…At least 10 very large crude carriers controlled by Tehran- based NITC signaled for ports in {China} this month, according to IHS Inc. (IHS) data compiled by Bloomberg. Each has the capacity to carry about 2 million barrels. … China imported about 17 million barrels a month from Iran last year, customs data show. At least 32 ships in NITC’s 40-strong fleet of crude carriers provided signals within the past month, IHS data compiled by Bloomberg showed today. …”
    From: http://www.bloomberg.com/news/2012-...-s-oil-as-u-s-and-eu-intensify-sanctions.html

    Billy T comment: US and EU/UK control of banks (and funds transferred thru them) has made it nearly impossible for buyers of Iran´s oil to pay in dollars via the normal financial transfers. India is paying with a mix of gold and tea shipments (They drink a huge amount of tea in Iran) while China is building two of the world´s largest and most modern oil refineries in Iran. Currently Iran must import almost all of the refined product it uses. Japan is not only buying Iranian oil still but lent India 15 billion dollar with which to pay Iran for oil too. (Japan hold a lot of dollar bonds that are very liquid - convert to cash in seconds.) I don´t know how S. Korean is paying, but if they have a trade surplus with US (and I suspect they do) perhaps just passing dollars they earn thru to Iran.

    So even if sanctions are now hurting, in the long run, Iran will have new income from oil companies paying tanker insurance fees (as well as the oil sold) and ability to refine its needed gasoline etc. I also note that the 10 tankers now sailing for China alone are delivering more oil to China than the average monthly shipments made last year.

    I was not familiar with the industry´s term "signaling" used above. It must be something (a flag?) on the ship and a sailing plan, like an airplane´s "flight plan."

    * Cheaper, I bet, than Lloyds does.
     
    Last edited by a moderator: Jul 30, 2012
  22. youreyes amorphous ocean Valued Senior Member

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    2,830
    Is Japan not part of U.N., why are they not questioned for abiding to the Western imposed regulations banning the purchase of oil from Iran? what makes them so special? How does Israel view their involvement?
     
  23. quadraphonics Bloodthirsty Barbarian Valued Senior Member

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    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.
     

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