Iran Stops Oil Sales To British, French Companies

Tyler Durden's picture

The geopolitical game theory escalates once again, as Iran, which four days ago halted exports to peripheral European countries took it up a notch, and has as of this morning halted sales to British and French companies. Reuters reports: "Iran has stopped selling crude to British and French companies, the oil ministry said on Sunday, in a retaliatory measure against fresh EU sanctions on the Islamic state's lifeblood, oil. "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." Here is the actual statement from As a reminder, on January 27 we said how Iran was about to "Turn Embargo Tables: To Pass Law Halting All Crude Exports To Europe." And so it has - now, the relentless media campaign about China isolating Iran in response to American demands has to be respun: recall that in early February Reuters told us that "China will halve its crude oil imports from Iran in March compared to average monthly purchases a year ago, as a dispute over payments and prices stretches into a third month, oil industry sources involved in the deals said on Monday." Apparently that may not have been the case, as there is no way Iran would have escalated as far as it has unless it had replacement buyers of one third of its crude. Incidentally, this is just as we predicted in "A Very Different Take On The "Iran Barters Gold For Food" Story." The end result of this senseless gambit by the west: Europe has less oil, the Saudi fable that it has endless excess suplies is about the be seriously tested, China has just expanded a key crude supply route, and Russia is grinning through it all as Brent prices are about to spike. Iran didn't invent chess for nothing.

This is what we cautioned in early February:

we humbly submit that instead of taking the Reuters article at face value, and one may certainly do that, what may instead be happening as Iran migrates to a non-dollar based international trade system is the testing of the waters of a non-USD regime, more importantly, one quietly encourage by  China, who is a very complicit participant in the transition to a world in which the US Dollar suddenly finds itself irrelevant. Whether replaced by gold, or a currency backed by a basket of hard assets (the CNY?) we don't know. However, we know one thing: China needs Iran's crude, which at last check was among the world's top 5 oil producers, and had the world's third largest proven oil reserves after Saudi Arabia and Canada, and despite media reports that it is actively looking for crude import alternatives, we would allege that this is nothing but purposeful disinformation. After all why would China comply with US demands for an enhanced Iranian embargo? The whole point of China's foreign policy to date has been to counteract US pushes and provocations abroad without fail. Why should it make an exception now. Frankly, we don't buy it.

Sure enough, ten days later neither does the world.

More from Reuters:


Industry sources told Reuters on Feb. 16 that Iran's top oil buyers in Europe were making substantial cuts in supply months in advance of European Union sanctions, reducing flows to the continent in March by more than a third - or over 300,000 barrels daily.


France's Total has already stopped buying Iran's crude, which is subject to fresh EU embargoes. Market sources said Royal Dutch Shell has scaled back sharply.


Among European nations, debt-ridden Greece is most exposed to Iranian oil disruption.


Motor Oil Hellas of Greece was thought to have cut out Iranian crude altogether and compatriot Hellenic Petroleum along with Spain's Cepsa and Repsol were curbing imports from Iran.

As we tweeted a few days ago, "Greece may be broke buit at least it has no oil."Win-win. Er... wait.

Needless to say, it is now time for Saudi Arabia to step up or shut up. And if many are correct, stripping away all the posturing about Saudi's near infinite excess supplies, may reveal a very ugly picture. And a $10 spike in brent in short order.

Saudi Arabia says it is prepared to supply extra oil either by topping up existing term contracts or by making rare spot market sales. Iran has criticised Riyadh for the offer.

Finally, here is why it is quite obvious that China has stepped up:

Iran said the cut will have no impact on its crude sales, warning that any sanctions on its oil will raise international crude prices.


Brent crude oil prices were up $1 a barrel to $118.35 shortly after Iran's state media announced last week that Tehran had cut oil exports to six European states. The report was denied shortly afterwards by Iranian officials.


"We have our own customers ... The replacements for these companies have been considered by Iran," Nikzad said.

Surely, when it comes to shooting itself in the foot, Europe truly has no equal.

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i-dog's picture

No hot soup for you, Sarko!

PS. How are the poms going to warm their beer and chill their pies now?

trav7777's picture

Iran has no choice but to attack.  Embargoes like this are recognized acts of war.

We're going to do a pearl harbor on them, strangle them until they throw the first punch and we can claim we are the victims.

LasVegasDave's picture

dont knock it; it's a good strategy

Ahmeexnal's picture

oil? who cares.

nobody gives a shit.

certainly not the eurosheeple, who are partying like it's 1299:

Mr Lennon Hendrix's picture

Don't we have unicorn piss for that or something?

The Banking Houses say so.

Citigroup says Peak Oil Theory is Dead:

Transformer's picture

Mr Hendrix,

  Glad to see you have seen the light about both "oil for dollars" and "No peak/lots of abiotic".  Glad to have you on board.

Mr Lennon Hendrix's picture

If someone wanted to sell oil for dollars and then have their bank trade dollars for whatever currency they wanted there would be no way for that to happen, thus why Saddam wanted oil for euros, he couldn't trade the dollars because dollars had no liquidity on the global market!  Nobody was using dollars in 2003!  Nobody!  How would he have traded his oil for dollars and then dollars for euros?  No way that could happen!  It's not like the dollar has been the most liquid market since it has been the reserve currency or anything.

And we can create oil out of thin air, like we do money.


Transformer's picture

So, you're still stuck on that "I'll just take my dollars over to the bank on the corner and exchange them for Euros" theory, huh?  I'm sure that works fine for you and me and most everybody else.  But what happens when you take $3-400 million dollars up to the teller and ask for Euros? (a supertanker load of oil)  Maybe a slight delay before you get your Euros?  . . . . .  Maybe a bump in the Forex price?  And when you consider this could be happening over 20 times a day throughout the world. . . . maybe a big bump in the Forex?

That's why oil is traded in dollars and dollars only (except for soon to be invaded rogue nations) and then held in reserves, and used to purchase US treasuries.....

Mr Lennon Hendrix's picture

This argument is used as the reason why the US went to war with Iraq.  It's a ridiculous theory.  The Skull and Bones Clan, led by the Bushes, wanted to search for oil and blow some shit up.  They didn't find much oil, but they destroyed a part of the world that they wanted to destabolize as much as possible before the Final War.

The fact is, diversifying out of a currencie is not that hard to do.  The FX market is more liquid than any other, and considering the dollar was vying for the title of the carry trade means it was an extremely liquid market. 

The fact of the matter is, Saddam would have tried to trade dollars for euros, he would not have gone and flat out demanded euros.

And it wouldn't have affected the dollar the way you think it would have.  The Fed knew that, the WH knew that.

Transformer's picture

Glad your with me on the "where the hell did that methane on Titan come from" front.

I'm not understanding the last part of your post.  From everything I've read, Saddam did demand, and get, Euros for his oil.  We could ask him about that to be sure, but he's dead now.

Mr Lennon Hendrix's picture

There is a diference between crude and methane, yes?

Everything you have read?  Did the authors interview Saddam?  Did you hear the tapes?  Or is this just a rumor, which has no logic behind it, considering that anyone who wants to diversify out of a currency can do so on the open market, the largest and most liquid market there is.

AmCockerSpaniel's picture

SWIFT  ..... Bank controls all these swaps (FX). Push the button and Iran or any other country can not very easily swap currencies.

Mr Lennon Hendrix's picture

So you are saying that the Global Banking Cabal that controlls the universe had the means to stop Saddam from trading currency but couldn't stop him from selling his oil for euros?  Think about how crazy that sounds.

Transformer's picture

They did stop him from trading oil for Euros.  That's the point.

Mr Lennon Hendrix's picture

The point is they could have stopped him in the marketplace, they didn't need to go to war.  But they did go to war.  So why did they go to war?  Not to stop him trading for euros, they could have done that in the marketplace.

Transformer's picture

ahhh, now we're getting somewhere.  How could they have stopped him in the marketplace?  It's a serious question.  The only way I could see that they could do that would be to apply sanctions, like is being done to Iran now, and is not working.  And of course, we are standing by ready to go to war to stop Iran.

Flakmeister's picture

Hey Transformer...

Did you ever compute what fraction of the first 5 miles of the interior of the earth would be comprised of oil for the numbers you gave re: abiotic production??

IIRC, you said 60 million bpd... Assume it has been going on for 800 million years and that it migrates at 1 mm per year (or 1 km per million years)....

I'll give you a big hint.. 60 million barrels of oil is about 3/4 of a cubic mile... 

Also please explain why if oil is being produced at a reasonable uniform rate at some point in the interior why the amount of oil found does not increase as you go deeper???

Please reconcile that with the following data

Mr Lennon Hendrix's picture

But Titan has methane, which means that....which means....shit I lost where I was going with that.

Unicorn One, calling for backup.  Unicorn One, copy....

tmosley's picture

Which means there is a method for producing methane that doesn't involve ancient biomass, duh.

I mean, I know it's cool to act like an idiot at school, but not so much in the real world.

Mr Lennon Hendrix's picture

Unicorn One, this is Unicorn Two, good to hear your voice!

Is there any crude on Titan?  Is there crude anywhere that has not sustained life?

Greyhat's picture

Did you ever drill there? :)

tmosley's picture

Nice deflection.  Methane exists on Titan.  How did it get there?  Could the same process have put it here?  Is that an ongoing process?

But you don't like to think about things that go against your ideology of death and inevitable extinction.

Hell, even your avatar speaks to that.  12 Monkeys was about the hopelessness of changing what is supposed to be a pre-ordained conclusion.

Mr Lennon Hendrix's picture

That is not what that movie is about at all.  You don't ever read between the lines, do you?

tmosley's picture

Yes, you would say that, because a part of your poisonous ideology is to defy the fact that your ideology is poisonous.  You instead claim that it is the fundamental nature of the universe that is poisonous.  It's a weak excuse that allows you to lay down and die rather than thinking for yourself.  A slightly more advanced form of idiots preparing for a literal zombie apocalypse.

Mr Lennon Hendrix's picture

I saw that the human spirit is one of good.  I say nature creates balance.  This balance is harmonious.  And you don't think I'm trying to fight for our freedom?

tmosley's picture

War makes strange bedfellows.  The US is fighting on the same side as al-Qaeda right now in Syria, and was doing the same in Libya.

The rest of your comment is mumbo jumbo.  There is no such thing as imbalance within a system if you are talking about forces and energy.  If you are talking about motion then there is no such thing as balance.  Harmony is an empty word.  

There is energy everywhere.  We just have to learn how to harness it to our own ends.  Denying that this is happening is denying reality.  Denying that it even COULD happen is denying all possible existance.  That is, it is the worship of death and oblivion.  I guess you can find balance and harmony there.

Mr Lennon Hendrix's picture

I have never written that we can't find an alternative energy source.  But we haven't, and crude production, which is the lifeblood of the economy, has peaked, so the problem will not be mitigated anytime soon.

I also think we will develope ways to live without the growth of energy, it just means people will be walking/biking more than driving and it means people will be farming instead of selling cell phones.  It means a new way of life, one I look forward to. 

I would be getting sick of you judging my character, by the way, if I respected you.  I don't.

Flakmeister's picture

Are you at it again...

As I said elsewhere, set up a simple model in Excel and see what comes of it...


tmosley's picture

I am not saying that it is a viable source.  I am saying that idiots like LH here throw up strawmen that even they are too weak to tear down.

I am of the opinion that if abiotic methane/deep biotic oil is ever to be a viable source of energy, we are going to need either a radical advance in extraction or exploration technology.  That may or may not happen.  

People like LH discount even the possiblity of its existance when its existance is CLEAR.  It is PROVEN, unless you want to open the can of worms that is "life on Titan".  As I have sadi REPEATEDLY, the only real question is "what is the recharge rate".  If this is a method of recharging existing wells, then it is clearly impossible.  If it is recharging wells that we don't know about, or that are exceptionally deep, then it may be moot.  It probably is.

Yet this strawman keeps coming up as if abiotic oil is the same thing as the thousands of other technologies that can be used to produce or extract other sources of coal, oil, natgas, and hydrogen.

Transformer's picture

Interesting questions you bring up tmosley.  I bet that indeed there is a recharge rate of surface  oil, and it is very fast.  Fast in terms of geological processes, which could mean millions of years to recharge a medium size oil pool.

As far as the technology of extraction and exploration, the Russians have put a tremendous amount of effort into that technology and have evidently gotten pretty good at it, good enough to make them number one.  But, because of industry wide Flakmeister thinking, no respecting geologist in the West would ever even dare to look at what the Russians think.  they'd probably lose their job.  And Flakmeister is a physics Phd.

Science is conservative and always goes with the money.  And the money is always with the current profitability profile.

Transformer's picture

(Hey Mort, I got a bite, I'll just yank on the line now)

And of course, since you wanted numbers, so bad, I just made those up for you.  LOL  I was as clear as I could get about that without actually saying "/sarc"

A friend at a party suggested that maybe the entire center of the earth, might just be filled with oil.  Now wouldn't that be a kick.  LOL again

To answer your question, uhhhh. . . .  the amount of oil does seem to increase as you go deeper, at least that's what the Russians think, and they are the world's number one producer.   You might ask BP about that deeper theory, as their discovery and spill in the gulf seemed to involve a huge amount of oil, that and drilling down to way below the biotic level.

It's all about calcium carbonate reacting with iron oxide (very common in the earth) at 50,000 atmospheres of pressure and 1500C.  That's how you make oil without any dinosaurs around.

Flakmeister's picture

Buddy.... start doing some real computations... You aint gonna convince me with your arm waving... having Ph.D. in physics means I ain't easily impressed by psuedo-science blowhards on the Internet....  

If I thought you had the brain power, I would suggest that  you put together a toy model in Excel to see what different assumptions result in...

You come to two conclusions, if abiotic production exists at any significant level we would be drowning in the stuff.... and if you clamp back on the production rate to match observed distributions then you find that the rate is *much* smaller than the rate which we extract it at...

You also have to deal with the fact that every fucking drop of oil found has a *unique* biological fingerprint...

Please reconcile the drilling sucess rate as a function of depth... after all it is only fucking data and not handwaving...


But you are likely too fucking stupid or ignorant to even question anything that pre-fits into your desired world belief....

Transformer's picture

Well, I've only got an EE in engineering, so you got me on that front.

It seems that you want me to use statistics to prove your Dinosaur theorem.  And of course we know all about statistics (and damn lies).  And of course you still got me on the education thing.

I just don't know, this is getting kinda boring.  I'm sort of leaning toward the hollow earth filled with oil theory, now.  Due to the well know magnetic properties of crude oil, it would certainly explain the ever shifting poles. . .  as that oil just continues to slosh around in there. 


(Iadded that so you'd know I was kidding)


Fucking stupid ignorant arm waving blowhard

Flakmeister's picture

Well... do the calculation re: the volume and if you cannot STFU...

Nice strawman re: dinosaurs....

You are either an asshat of the highest order or are you are one of the creationist abiotic oil types.... I've dealt with a few of them as well here..

I'll give you another hint... compute the volume of 2 spheres of different radii and assume the interior surface is the source of your oil....

Let me guess... even if simple mathematics shows that your pet theory is a crock of shit, it still must be correct because you think so...

tmosley's picture

Nice ad hominem there re the creationist crack.

Implying that you beleive there is life on Titan.

Implying you are a nutter.

Possibly implying you utilize doublethink instead of logic to formulate your opinions.

Flakmeister's picture

Nope... our very own BR believes in abiotic oil because God created the world ~4000 years ago and that is the only way we could have oil....

tmosley's picture

I don't see anyone in this thread with the initials BR, nor do I see anyone espousing this view, meaning you are comparing Transformer and others to this "BR" person, and using his ideas to imply that your actual opponent's arguments are wrong.

IE you are using ad hominem.

IE you have a weak argument, and have to resort to that sort of crap because of it.

Flakmeister's picture

Why dont you ask "Bicycle Repairman" about the age of the earth and his views on abiotic oil???

tmosley's picture

Even if that is his opinion, you are not speaking with him now (he has exactly zero comments upthread), making your comment ad hominem.

Flakmeister's picture

Here is another little thought experiment for you...

Compute the volume of earth where the conditions that you require exist...

Now compute the fraction of material that can participate in the reaction...

Now propagate the oil towards the surface....

Ever notice that all the Russian abiotic oil batshit does not have any simple calculation showing what the rates would be?

Wonder why......

(Never did address the issue of biological markers either.... did you??)


Transformer's picture

Well, Flakmeister, you sure got every body all riled up.  You want some figures.  Lets see, the earth is 4 billion years old.  Now if the abiotic process 60 miles down on our little spheroid floating through space, made just one barrel per year, that would be 4 billion barrels.  ummm.... not quite enough..... so lets say it make 10 barrels per year... and that would be 40 billion barrels...... still not quite enough, so how about somewhere between 100 and 1000 barrels per year, giving somewhere between 400 billion and 4 trillion total barrels.  That certainly seems possible to me from an area of 200 million square miles of hot calcium carbonate and iron oxide at 1500C and 50,000 atmospheres.  that would be just 1 barrel of production for every 200,000 square miles of your inside the sphere area.  Does that seem possible?

And of course, then the earth just stored it all up, waiting for us primates to come along and invent the ICE.  But wait, would you rather have me do the computation for just 4000 years, you know, since dog created the universe in a week?  Oh.... it's just too damn confusing.

Pseudo science is my specialty!!!   LOL

So, are you saying that the Russian theory is about batshit.... as their biologic material.... that doesn't make sense, mammals have only been around for ...... it's just so confusing.

Flakmeister's picture

You are the one that is confused...

For shits and giggles, what fraction of the earth is calcium carbonate?

Why do we not find more oil the deeper we go?

Why is there no oil found in the deep gold mines is south africa (you know the ones that go down to 13,000 ft??)

tmosley's picture

You make the assumption that oil is both produced and retained everywhere.  This assumption is not valid.

Further, it is likely that most of the methane and oil that are produced wind up rising to the surface in miniscule concentrations.

If oil is produced in significant quantities abiotically, there must be an energy source.  And if there is an energy source, it is highly unlikely to be evenly distributed throughout the surface.

I suspect you realize this, and have no way to refute the argument, so you resort to using a strawman in the form of "no oil in gold mines".

You don't have to have an answer for everything.  Some things just need more research.  That is another major problem I have encountered with POTs (wow, not far from there to crackPOTs, lol), they want to pretend that we know everything there is to know about everything.  I suspect this is related to their anti-scientific and anti-technological progress bias.

Transformer's picture

Jeeez flakmeister,  Our bountiful earth, the Gaiia, who makes all kinds of things for us to use, oil, metals, granite, dinosaur bones, etc.  Do you expect them all to be mixed together?  16,000' is generally considered to be the lower limit of biotic material, you know where dinosaurs died and then the climate and other upheavals piled other stuff on top.  So, from one point of view, they didn't go deep enough to get to the abiotic.  The Abiotic could be considered to start at 16,000'.  And those BP engineers with that deepwater rig in the Gulf, they knew that.  At least they found out. . . .   about pressures and temperatures they had never encountered before, which blew their equipment apart and set the rig on fire, and then, they couldn't cap it, or at least it took them forever, and it's not exactly clear how they did it, or even if they really did. . .  witness lots of reports of new leaks in the area.

Just a couple more hours and we'll wrap up this discussion.