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 MOP.ir. 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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March Hare's picture

I think i recently read something about worms in the rocks, some downhole... do you recall?

btw this thread is pretty damn funny, thanks for the banter / entertainment....

http://www.popsci.com/science/article/2011-06/worms-discovered-two-miles-underground-are-deepest-dwelling-complex-life-forms

oddjob's picture

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

3/4 of a cubic mile is roughly 20 billion barrels...you are off by a tad.

Flakmeister's picture

Yes, I typed too quicky and forgot to add per year...

60,000,000 per day is ~3/4 cubic mile per year...

CrashisOptimistic's picture

Citibank knows nothing.

FYI the oil shipping reports showed no bookings of tankers from Iran to Europe even months ago.  Iran's not announcing anything here that was not already true.  They have not sold oil to Europe for months.

This is not rocket science.  There is no oil slack in the world.  No one can open their spigot wider.  If Europe won't buy Iranian oil, there will be someone (China) to buy what they won't, and just shave a dollar or two off the price, using the loss of a customer as leverage on the vendor.  The EU will then be more frantic buying from whoever China no longer buys from (having gotten that price break and cancelled an order) and will bid that oil up.

Result, no change.  When you are selling food in a famine, you will always have customers and it is a seller's market.

Mr Lennon Hendrix's picture

This is like that biblical shit about 7 lean years, isn't it?

King_of_simpletons's picture

Start bombing Iran already. This is not the Greece default saga which has been drawn out for more time that it is worth.

Here is a tip for starters. Take a MOAB and drop it on Tehran. See all the mullahs scatter. Round them up and send them to allah land.

Makmood Akkmadenajob will be hiding is some rat hole like all the warrior class islamic leaders waiting for the prophet to descend from somewhere. Put a cap in him. Iran war is over.

US will be bazillion more dollars in debt. That's easy to fix. Just print. 

Mr Lennon Hendrix's picture

Awkward Dinner Jacket is playing chess, so why not flip the board and cap his ass.  Fuck games, time to kill some human-beans!

Ah'company yee-haw!!!!

King_of_simpletons's picture

Yeh baby, cap his ass. We shall not forget 911 started by the Iranians. New al-qaeda document reveals that the iraqians got funding from iranians for 911. Powell is mad. He is going to show the document to the UN as proof, for a global coalition of the willing.

trav7777's picture

yeah, citi has 3.5mbpd coming from fucking shale in ND?  What kind of insane shit is that?

US oil production is rising again?  Like it did after Prudhoe, right?  what happened after that?

Mr Lennon Hendrix's picture

To economists growth is infinate, because they so so.

tmosley's picture

It is increasing slightly.  We'll have to wait to see if it develops into a real trend.

http://www.indexmundi.com/energy.aspx?country=us&product=oil&graph=produ...

But you want to say everyone is doomed NOW!  

Mr Lennon Hendrix's picture

Soon we will move from 5 mill to 10 mill in no time!

What's the EROEI nowadays anyway?

hardcleareye's picture

This isn't about being "doomed".....  it's about being realistic and understanding what the options are. 

It seems to me that if you are in a car that is going to crash and you have foreknowledge of said crash than it would seem to me that the prudent course is to plan the crash to do the least amount of damage instead of stepping the accelerator pedal to hasten said crash.

By buying time you may allow some bushy tail engineer to come up with a way to prevent said crash or min it?

Is my logic flawed?

tmosley's picture

The reality isn't about being doomed or not, but these guys follow a certain special religion where the only conclusion is depression leading to extinction.  Any and all arguments that say otherwise are attacked, along with the messangers, generally not with any sort of logic, but rather ad hominem and appeals to emotion.

Understand that your metaphor is a good one.  But they claim that the wall you wish to avoid extends everywhere and in all directions and there is no means of avoiding it or lessening the impact.

Your logic is perfect, and is more or less my exact argument.

Mr Lennon Hendrix's picture

Unicorn One, this is Unicorn Two, you are doing great.  Copy.

Flakmeister's picture

A very simple analysis of the Bakken shows that the rate of increase per rotary rig per annum is about ~100 barrels per day....

So in order to get the Bakken up to 3.5 mmpbd you would need about 10,000 drilling rigs running flat out for 3 years....

Why don't you google up how many oil rigs capable of horizontal drilling currently exist in the world?

tmosley's picture

Implying more can't be built.

Implying better ones can't be built for this purpose.

Flakmeister's picture

Nope.... just a little perspective....

Shit don't happen just because you wish it to be so...

 

tmosley's picture

Right, it happens because prices drive risk reward scenarios, which drive action.

My "wishes" have nothing to do with it.  Nor does the zealotry of the POTs.

tmosley's picture

Right, it happens because prices drive risk reward scenarios, which drive action.

My "wishes" have nothing to do with it.  Nor does the zealotry of the POTs.

Bicycle Repairman's picture

LOL.  "They" "found" more oil when they needed to. Whocouldaknowed?  Time to adjust to the new meme.  Someone better get the memo to the academic community.  Peak Oil perfessers can lick their wounds and go into hiberation until 2035.  When the domain "oildrum" becomes available, I'm going to buy it and shut it down until then.

hardcleareye's picture

Yup, they found it and they are going to find more, but did they tell you how much it is going to cost to get it out of the ground and to the gas pump?

Oh they forgot to do that?  And you didn't bother to ask?  Of course you have ASS-U-ME D that new innovations will happen and reduce production cost and bring it in line to what it is today. 

And young bright bushy tailed engineers (I have a few of those in my family in the oil and gas patch industry) will discover how to make unicorns shit skittles.  And in the TIMEFRAME of your choosing.

BR I suggest you go post your comment on The Oil Drum, it would be real interesting and amusing to see the "old guard" (you know the old geezers with gray hair their gentials, that have been working in this industry for 40 plus years) tear up your "supporting data"......

Oh wait they have already done that, you just haven't bothered reading it, you must be part of the Obama "hopium" crowd.

I seem to recall Trav7777 tearing you a new asshole on this issue a while back. (maybe I have confused you with someone else)

Taint Boil's picture

 

 

Yeah I think it was him (bicycle guy)and when I [we] mentioned The Oil Drum that really stirred up the ole 5hit storm. How anyone would have a hard time with The Oil Drum is beyond me ........

Matt's picture

Citigroup says Peak Oil Theory is Dead

They are correct. With North Dakota and the Athabasca Basin, we are well on track to producing 160 million barrels per day by 2020 and 320 million barrels per day by 2030. Within 5 years, America will begin exporting 50 million barrels of oil per day to the rest of the world, with a $50 royalty per barrel, thus allowing budget expansions of $2 Billion per day, and $500 million per day in national debt reduction. This is absolutely Bullish!

hardcleareye's picture

OMG, that is funny...  did Citigroup also say at what the cost of producing that oil will be?  Did they also explain/study what happens to the economy when the end user has to pay said cost????????  Did they talk about the production rate of those reserves?

Peak oil is NOT about running out of oil, it's about running out of "cheap oil"......  our economy goes into recession when oil exceeds about $100/barrel.  Yes, innovation will occur to lower production cost, but when and to what magitude is the big "short term" question!  Also what is the RATE of production of these reserves? If you do a little more home work you will discover that the production of these reserves is in excess of $100/barrel, some say oil sands need more like $120/barrel to work. 

So these new reserves have a lower RATE of production and a higher cost of production (that puts the economy in a recession) than the soon to be/already depleted reserves.

That IS PEAK OIL!!!!!!!!!!!!!

Gail The Actuary has some articles to further explain from The Oil Drum regarding the Athabasca Basin aka tar sands,

http://www.theoildrum.com/node/5701

http://www.theoildrum.com/node/5708

http://www.theoildrum.com/node/5666

 

(Bullish my ass....).

Bicycle Repairman's picture

Yeah.  The oil industry and the oil producing countries are sharing their data with "Gail the Actuary".  LOL. 

Flakmeister's picture

And the Russians are sharing a "top secret" source of oil with you.... <rolls eyes>

Zero Debt's picture

Spot on. It is the western powers who are committing the agression. There is no Iranian air force circling around London or Paris. There is no navy outside New York. It is embarrassing to see how the mainstream media is presenting Iran as a threat, where it is actually just defending itself.

Cursive's picture

@Zero Debt

Passive agressive always beats agressive in the battle of moral high ground.  Not that I like it, but it is what it is.

LasVegasDave's picture

Lets just hope we do the right thing this time and grab the oil.

We fucked up Iraq pretty good and didnt even leave with the oil.

Invasion checklist

1.  take out nukes

2. Kill Mullahs

3. Hang A-Jad from lamp post

4. Confiscate oil

Problem solved

roadhazard's picture

"Showered with flowers" and they'll all turn Christian.

hardcleareye's picture

Gave you a +1 because I think you forgot to use <sarc> at the end of your post.

ToNYC's picture

To strangle "them", you must have real power. Five dollar petrol kills power. Circle jerk logic bought only by fools.

Tuco Benedicto Pacifico Juan Maria Ramirez's picture

How about if Iran shows some creativity and pulls off a false flag on the west.  Pop off a small nuke at a Tehran day care center and claim that Heimi McVeighberg of Mossad did it and attack Israel.  "What is good for the goose is good for the gander"!

Dr Bob's picture

i have been saying this same thing for a year now and people think im crazy. this is exactly how its going to go down. great thought, double thumbs up.

jtg's picture

Like we didn't attack in 1973 during the Arab oil embargo to the West. In fact, Europe then capitulated and started the massive Muslim immigration that is overrunning Europe and leading to Eurabia.

hardcleareye's picture

I have a good friend who's young son is on the Lincoln.  Like most US citizens, to date, she is "blissfully" unaware of the danger her son is in.  I have chosen to remain silent in our discussions, as explaining this to her will bring her nothing but grief and angst, after all she can do nothing to change the inevitable outcome.

This young man went into the navy because he could not find work.  I wonder how many other mothers (in Iran and the US) are in her shoes?

Cathartes Aura's picture

for what it's worth,

This young man went into the navy because he could not find work.

is a very poor excuse nowadays, and shows a distinct lack of both morals and intelligence.

I understand the story, I just believe we need to stop "honouring" the voluntary enlisting of global murderers in the MIC.

when the "mothers" and the fathers begin to educate themselves, and the children they claim to love, in the same spirit of the 60's, where they sent their kids to Canada to preserve their integrity, THEN we'll know the machine is faltering. . . has yet to happen though.

 

cranky-old-geezer's picture

 

 

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

For once I agree with you ...well ...sorta anyway.  US embargo is an act of war, and Iran has every right to attack the US, but they won't.

No problem, Russia & China will (gladly) do it for them. 

Japan is now part of that alliance, and I'm curious what $3.5 - $4 trillion in dumped Treasuries would look like on the bond market.   More than that if you count Treasuries Russia holds.

...then comes thermonuclear attack to sorta finish things off.

Cyrano de Bivouac's picture

We'll see. Th Anglo-American financial system tried to provoke Nazi Germany into a war with the USA(EX. Lend Lease Act) but failed so then they turned their attentions to Japan. After Pearl Harbor,  Germany declared war on the Allies to fulfill treaty obligations to Japan. So we(Anglo American financial system) got our wish-a full blown war with the Nazi's by means of Japan's premptive strike. So how the conlict with Iran will play out is not that clear cut there are other scenarios just as likely.

SHEEPFUKKER's picture

Where have I seen this movie before?

mc_LDN's picture

I know... Amreica F*** Yeah!!!

Greyhat's picture

This movie? "Starve Germany into submission this winter." Or the later remakes like Iraq?

quintago's picture

Actually SA has shown a fall in exports. They are also stockpiling.

http://www.jodidb.org/WDS/TableViewer/tableView.aspx?ReportId=9620

 

 

Randall Cabot's picture

Europe has plenty of oil reserves until Purim when the NWO will begin the strike to take Iran's oil:

 

"The European Commission said last week that the bloc would not be short of oil if Iran stopped crude exports, as they have enough in stock to meet their needs for around 120 days."

http://www.cnbc.com/id/46445889      

Purim: Why War On Persia
(Iran) Could Start March 7th

2-19-12

 

http://rense.com/general95/purimwar.html     

 

 

 

 

 

 

Cyrano de Bivouac's picture

It might be wise to take cover on March 7th. First Gulf War- on Feb 28th 1991 Purim festival starts-150,000 Iraqi soldiers trapped on road from Kuwait to Basra(lots killed), Bush1 orders cessation of hostilities. Second Gulf War-on March 17, 2003 Purim festival starts, Bush delivers ultimatum to S. Hussein and aerial(Shock and Awe campaign) starts on 19th. Incidentally if you have ever wondered about the genesis of the strange term "Shock and Awe'  well "skekineh" is the Hebrew word for God's presence in the Holy of Holies in the temple in Jerusalem. Skip to the present, aerial war started on Libya on Purim 2011. Mind you I've said nothing.

Kaiser Sousa's picture

check, and mate...biatchez.....