Iran's top oil customers are, in order: China, India, South Korea and Turkey.
India will buy Iranian oil with rupees. China also will be totally impervious to the Trump administration's command. Sinopec, for instance, badly needs Iranian oil for new refineries in assorted Chinese provinces, and won't stop buying.
Turkey's Economy Minister Nihat Zeybekci has been blunt: "The decisions taken by the United States on this issue are not binding for us." He added that: "We recognize no other [country's] interests other than our own." Iran is Turkey's number-one oil supplier, accounting for almost 50% of total imports.
And Iraq won't abandon strategic energy cooperation with Iran. Supply chains rule; Baghdad sends oil from Kirkuk to a refinery in Kermanshah in Iran, and gets refined Iranian oil for southern Iraq.
Russia won't back down from its intention to invest $50 billion in Iran's energy infrastructure.
Japan and South Korea are lobbying heavily to get waivers. According to South Korea's Energy Ministry: "We are in the same position as Japan. We are in talks with the United States and will keep negotiating to get an exemption."
In a less Hobbesian world, the EU-3 (France, UK and Germany), plus China and Russia -- which all negotiated the Iran nuclear deal, known as the Joint Comprehensive Plan of Action or JCPOA, along with Japan and South Korea, would be telling the US the Trump administration's unilateral economic war against Iran is, in fact, a violation of a UN-endorsed treaty, totally disregarding nations that have pledged to protect the JCPOA. In the real world though, that's not going to happen.
It's all about energyOnce again, the action to watch will be at the Shanghai Energy Stock Exchange. Petro-yuan contracts started trading in late March. By May, they were already covering 12% of the global market. The price of a barrel of oil, in yuan, has oscillated between Brent and West Texas Intermediate (WTI).
China is going no holds barred, betting simultaneously on Saudi Arabia and Iran. China Investment Corp. may well buy 5% of Aramco, at roughly $100 billion. In parallel, China started paying for Iranian oil in yuan in 2012. If the Europeans buckle up, as top Iranian analysts expect, the volume of energy business with China may soon reach $40 billion a year.
Iran is firmly linked to the petro-yuan. Iran now may rely on a fleet of supertankers, properly insured, to export its own oil. The Iranian calculation is that Washington's economic war will spur higher oil prices. So, even if Iran's exports are bound to suffer, energy income may not be affected.
Shaded by all these dramatic eruptions, we find some startling data. Iran -- and Russia -- may sit on an astonishing $45 trillion worth in oil and gas reserves. US fracking is largely a myth. Saudi Arabia may have at best 20 years of oil supply left. It's all about energy -- all the time.
The usual suspects will hardly sit back and relax while endlessly demonized Russia, just like Norway, builds a solid middle class through oil revenue and massive current account surpluses. Alarm bells are about to sound, to the tune of "Putin has taken over OPEC." In fact, it was Putin who convinced Mohammad bin Salman (MBS) they should fight the US shale offensive together.
The OPEC-plus-Iran puzzle is far from solved. Only one thing is certain; the future spells out brutal, covert resource wars.
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