Sunday, February 19, 2012

Iran Ends Crude Oil Sales To UK And French Companies

The Iranian regime has formally announced that it is cutting off all oil sales to French and British companies.

The ban is in retaliation for EU sanctions on buying Iranian oil, set to go into effect on July 1st of this year.

"Exporting crude to British and French companies has been stopped ... we will sell our oil to new customers," spokesman Alireza Nikzad was quoted as saying by the Ministry of Petroleum website. For 'new customers', read India and China.

The European countries had already cut back their purchases of Iran oil in anticipation of the sanctions, with major players like French company Total, Royal Dutch Shell and Spain's Cepsa and Repsol either cutting back sharply on Iranian crude or ceasing to buy it altogether.The EU accounted for close to 18% of Iran's imports.

The Europeans say they have reserves for about 120 days, and there are additional sources available like Russia, South America,Libya, the U.S.and European North Sea Oil. In addition, the Saudis and Gulf States have already pledged to make up any shortfall. That could lead to fireworks if the Iranians decide to try close off the Strait of Hormuz to stop the Persian Gulf Oil from reaching Europe.

The idea behind the sanctions is to force Tehran into giving up its illegal nuclear weapons program. I see the Iranian regime as trying something much more dramatic rather than giving up their nukes.

1 comment:

B.Poster said...

"I see the Iranian regime trying something more dramatic..." I agree. While the media breathlessly drones on and on about a coming Iraali or American attack on Iran, what they really need to be talking about is an attack by Iran on Israel, America, or both. This scenario is far more likley to happen than an American or Israeli attack on Iran.

The sanctions are an attempt to undermine Iran's ability to do carry out this attack. If we sat by and did nothing, the coming attack would be even more devestating to America. Essentially the sanctions or the attempt at them are an act of desparation by the American leadership as it tries to confront a very dangerous adversary.

India and China could care less how many Americans get killed as long as they get their oil. Both countries would likley view harm to America as good for them as it weakens a "strategic competitor." The same calculus applies to the EU nations as well. America is a strategic competitor for them. As such, their leaders be they French, German, British, or whoever else will view harm to America as good for them.

Given that Indian and Chinese purchases of Iranian oil will eaisly make up for the losses in sales to Europe and the Gulf States and America will not be able to easily make up the loss of Iranian oil assuming they can at all, Iran is in a very good position. Its hard to envision a scenario where South America, Libya or the US will be able to make up the shortfall that results from a lack of Iranian oil shipments. Even if they did, those shipments from Russia, South America, and Libya will come at a steep price. As such, we should expect to see Western Europe distance itself from America very soon. Furthermore, given the need to keep Russian and South American suppliers happy they will very likely be taking an actively hostile approach to America very soon. Of course they can always go back to Iranian oil shipments, as its unlikely the US or the Gulf States will be able to make up for these losses. As such, any support for any kind of tough approach on Iran by Western Europe will not last very long.

If this were a poker game, which its not, Iran holds all the good cards. America holds an extremely lousy hand. In a poker game, one generally folds lousy hands and tries to get a better hand next time. That's not an option here.

Given that with Russia and China backing Iran a direct military confrontation with Iran is all but impossible for us, I'd suggest an approach that gives us a fighting chance to defend our country such as redeploying our forces to defensible positions along our borders, upgrading and expanding the nuclear arsenal, training a population in civil defense much like Israel does, and developing our own oil and gas reserves.

Will ANYONE in a position of influence advocate these things right now. Unforutnately I am not seeing any one who will. As such, its hard to be optimistic.