- 10 February 2012
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- NIAC round-up
Amidst increased sanctions, Asian powers push negotiation
The Foreign Ministry of China has said it would send an Assistant Foreign Minister to Iran to “have a further exchange of views with Iran over its nuclear program,” amidst sanctions that are affecting trade. China has already sought discounts on Iranian oil and cut purchases this year by over half, pushing up India to be the largest buyer of Iranian oil, although India is still working out the details of a barter system (Reuters 02/10). Moreover, Indonesia, the world’s largest palm oil producer, has said it would consider proposals from Iran in barter trade. According to Reuters, Tehran is offering gold bullion in overseas vaults and tankerloads of oil in return for food and basic staples (Reuters 02/10). Meanwhile, as a delegation of Indian businessmen head to Tehran for new trade opportunities, Prime Minister Singh said “There are problems with Iran nuclear programme. We sincerely believe that this issue can be and should be resolved by giving maximum scope to diplomacy” (Reuters 02/10).
Japan is trying to gain a waiver from U.S. penalties on companies doing business with Iran while it seeks suppliers to offset a reduction in Iranian oil imports. Japan currently gets about 9% of its oil from Iran and it has already reduced Iranian oil imports by 40% in five years (AP 02/10).
Iranian oil trade flows drop and steel imports collapse
The International Energy Agency has said up to 1 million barrels per day (bpd) of Iran’s 2.6 million bpd of oil exports could be replaced once sanctions go into effect, significantly greater than the 600,000 bpd of Iranian oil the EU bought last year (Reuters 02/10).
Steel exports to Iran, one of the world’s largest importers of steel billet, are collapsing because sanctions are preventing local buyers from using major currencies. Major steel traders are unwilling to accept payment in alternative currencies such as Indian rupees and Russian roubles. Steel billets are semi-finished long steel products used primarily in construction. The reduction in Iranian imports is depressing the prices of international steel billets, which fell by about $50 a tonne in one month (Reuters 02/09).