South Korea Warns US Against Crude Shortage

From the Iran Daily:

Kim Jae-shin, [South Korea’s] deputy minister of foreign affairs and trade, underscored that point with US officials, a news pool report said.

“Many in South Korea are quite worried that further strengthening sanctions in Iran at this time will destabilize international crude oil markets and bring about adverse effects on the economy,” the report quoted him as telling the officials.

A team led by the US State Department’s special adviser for nonproliferation and arms control, Robert Einhorn, and the Treasury Department’s assistant secretary for terrorist financing, Daniel Glaser, started a three-day visit to Seoul on Monday. They will head to Japan afterwards. “We’re urging all of our partners to help us to work with us in putting pressure on the government of Iran to get it to negotiate seriously.

“Particularly, we’re urging them to reduce their purchases of crude oil from Iran,” Einhorn told a meeting with government officials, the news pool report said. Tehran has been under a growing array of UN and unilateral sanctions for years, but a US bill that President Barack Obama signed into law on New Year’s Eve went further than previous measures, aiming to stop countries paying for Iranian oil.

Iran says its nuclear program is for peaceful means and it has threatened to close the Strait of Hormuz, the world’s most important shipping lane for crude, if sanctions are imposed on its oil exports. South Korea has some $5 billion owed to Iran’s central bank for crude oil imports trapped in its banking system because of the difficulty of sending money to Iran without falling foul of US sanctions. “We’re urging them to unwind their financial deals with the Central Bank of Iran,” Einhorn said.

Despite the sanctions pressure from the United States, South Korean refiners have agreed to buy slightly more Iran crude in 2012 than they did in 2011, company and industry sources said.

The latest sanctions law from the United States, which can punish companies that deal with Iran’s central bank, has set off a round of shuttle diplomacy as Asian government fret that Iran crude supplies could be cut off. Asian leaders are in the Middle East discussing alternative crude supplies to Iranian oil, although industry officials say the only viable seller in the volumes the region would require is Saudi Arabia.

Iran on Tuesday warned Saudi Arabia to reconsider its vow to make up for any shortfall in Iranian oil exports under new sanctions, saying Riyadh’s pledge to step into the market was unfriendly. India’s foreign secretary also said on Tuesday that the country continues to buy oil from Tehran and will not seek a waiver from the United States that would protect buyers of Iranian oil from a fresh round of sanctions, Reuters reported.

“We have accepted sanctions which are made by the United Nations. Other sanctions do not apply to individual countries,” Ranjan Mathai told reporters, adding New Delhi was not seeking a waiver from Washington. “We continue to buy oil from Iran.
India has been struggling to pay Iran for oil imports after the recent US sanctions.
The sanctions have created a dilemma for Asia’s third-largest economy as it strives to balance the need to keep importing about $12 billion of Iranian crude annually without upsetting warming ties with Washington.

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