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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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Sun, 02/19/2012 - 12:38 | 2174934 rwe2late
rwe2late's picture

 Perhaps this should not be portrayed as Iran cutting off the oil.

How is Iran supposed to sell oil to countries which refuse to have normal financial dealings?

Apparently, some countries have chosen to go along with the US embargo against Iran, even if it means shooting themselves in the foot.

Sun, 02/19/2012 - 22:55 | 2176628 Buck Johnson
Buck Johnson's picture

Definitely no soup for them.  Two reasons, one there is no way that Saudi Arabia has that much extra capacity to supply the rest of th world with a few million more barrels a day, especially when they will be in competition with each other.  Two, I can't see Saudi Arabia actually wanting to do that when they know that Iranian oil will be off the market for a long time and I can't see them continuing to keep the production up that high.  Oh one more thing, if you don't think that Saudi Arabia's (they are Sunni a minority ruling a Shia majority) main oil terminals and process areas aren't targeted by Irans rockets you are very dead wrong.  I bet anything they will take out their main Oil refinery (which is the largest in the world) and other facilities.  Even a miss would shoot oil prices up 30 bucks in a day or more.

Sun, 02/19/2012 - 11:31 | 2174735 Corn1945
Corn1945's picture

Europe relying on Saudi Arabia's bullshit statistics is going to prove to be a really dumb decision. 

Sun, 02/19/2012 - 11:33 | 2174745 Uncle Remus
Uncle Remus's picture

Europe relying on bullshit is going to prove to be a really dumb decision.

Sun, 02/19/2012 - 15:12 | 2175470 TheFourthStooge-ing
TheFourthStooge-ing's picture

Bullshit is America's biggest export.

 

Sun, 02/19/2012 - 15:37 | 2175559 cranky-old-geezer
cranky-old-geezer's picture

 

 

... that plus inflation.

Sun, 02/19/2012 - 11:34 | 2174749 Mike2756
Mike2756's picture

$95 their minimum? they cut output in december.

http://www.cnbc.com/id/46445698/

Sun, 02/19/2012 - 12:35 | 2174923 ToNYC
ToNYC's picture

Bulls%t statistics prove 19 cessna barely-ready, party-hardy saudis can fly big jets aerobatically and make the debris disappear in the stage fog.

 

Sun, 02/19/2012 - 12:46 | 2174957 sun tzu
sun tzu's picture

Everything blew up and burned up except for their passports, which were found intact without a scratch on them

Sun, 02/19/2012 - 12:55 | 2174982 optimator
optimator's picture

Four months ago I was thrown out of flight school because I couldn't handle a Cessna 172, now I'm flying a Boeing 757!

Sun, 02/19/2012 - 13:04 | 2175013 Uncle Remus
Uncle Remus's picture

La Quinta huh.

Sun, 02/19/2012 - 16:56 | 2175763 my puppy for prez
my puppy for prez's picture

I'm going to "try this at home"!  Let any believer in the official/gubment 9/11 story join me in setting our passports ablaze, as per the scientific method.  

Get back to me if yours survives completely unharmed!

Sun, 02/19/2012 - 11:43 | 2174743 SolidSnake961
SolidSnake961's picture

Chess was invented in India during Gupta Empire. Check wikipedia. http://en.wikipedia.org/wiki/History_of_chess

Sun, 02/19/2012 - 11:50 | 2174794 quintago
quintago's picture

India invented hemorrhoids.

Sun, 02/19/2012 - 13:51 | 2175174 hardcleareye
hardcleareye's picture

All that curry...

Sun, 02/19/2012 - 12:00 | 2174823 trav7777
trav7777's picture

the persians imposed the caste system and were the rulership class in india, especially punjab

Sun, 02/19/2012 - 12:02 | 2174831 SolidSnake961
SolidSnake961's picture

persians didn't rule india when chess was invented, they came later on....amazing that ppl would down vote my post cuz it has facts

Sun, 02/19/2012 - 12:22 | 2174894 Randall Cabot
Randall Cabot's picture

Claiming the Indians invented chess is like claiming the English invented baseball.

Sun, 02/19/2012 - 13:10 | 2175029 King_of_simpletons
King_of_simpletons's picture

I salute you "One liner" historian.

Sun, 02/19/2012 - 14:33 | 2175336 tmosley
tmosley's picture

Better get to editing wikipedia then: http://en.wikipedia.org/wiki/History_of_chess

Unless you are being sarcastic, since the English did invent stoolball, the most likely predecessor to baseball.

Sun, 02/19/2012 - 23:28 | 2176693 Randall Cabot
Randall Cabot's picture

Exactly, the Persians invented chess out of some predecessor Indian game just like the Americans did with Cricket to invent baseball and Rugby to invent football.

Sun, 02/19/2012 - 20:00 | 2176150 falak pema
falak pema's picture

cricket...all padded up. Behind wicket.

Sun, 02/19/2012 - 12:32 | 2174917 Sabibaby
Sabibaby's picture

You're either with us (the US) or them (Iran). Facts only matter to trrsts, you're not a trrst are you?

...and the down votes are probably from referencing Wikipedia...

Sun, 02/19/2012 - 13:50 | 2175167 hardcleareye
hardcleareye's picture

For God sakes!  Some people on ZH take themselves way to serious, he is not writing a pier reviewed paper on the subject matter, a quick web craw reference to Wiki is not a bad place to start on the education/introduction of the matter.

Sun, 02/19/2012 - 15:07 | 2175450 aheady
aheady's picture

Long walk... short peer.

Sun, 02/19/2012 - 15:16 | 2175488 TheFourthStooge-ing
TheFourthStooge-ing's picture

Peer one imports.

 

Mon, 02/20/2012 - 00:12 | 2176771 Uncle Remus
Uncle Remus's picture

Pierless.

Sun, 02/19/2012 - 19:58 | 2176145 falak pema
falak pema's picture

God, if he exists knows history before it gets written. In fact he could write the Wiki all on his own. Maybe he does! 

Sun, 02/19/2012 - 21:13 | 2176371 Sabibaby
Sabibaby's picture

You know you're right, if you want history as Isreal wants it or Iran or wants it, or the truth?

Sun, 02/19/2012 - 20:01 | 2176153 falak pema
falak pema's picture

I'm the last Melian.

Sun, 02/19/2012 - 19:56 | 2176140 falak pema
falak pema's picture

ha ha ha, now this is priceless. Persians invented the Vedas. Hey, buy yourself a history book first. Right? One that begins before 1776.

Sun, 02/19/2012 - 13:08 | 2175025 King_of_simpletons
King_of_simpletons's picture

@solidsnake

You are talking to the fox news crowd. They believe news that they'd like to believe.

Sun, 02/19/2012 - 13:14 | 2175047 SolidSnake961
SolidSnake961's picture

Well it looks like that is half of ZH if I take the even split votes on my post as a representation.

Mon, 02/20/2012 - 01:45 | 2176258 Tompooz
Tompooz's picture

Even if the Persians didn't invent chess (the origins go back even further than India--ancient Egyptian papyrus shows pictures of a game that looks like chess), they certainly took to it with great enthousiasm and are still strong players today.

I was a member of the Tehran chess club and remember many a defeat, particularly from the hands of the police commissioner... he lent me his Nimzowitz book ("My game")  to improve my game. :-/

Sun, 02/19/2012 - 11:33 | 2174744 LaLiLuLeLo
LaLiLuLeLo's picture

Meet your new leader: OPEC

Sun, 02/19/2012 - 13:45 | 2175149 hardcleareye
hardcleareye's picture

NOT!!!!!!!!!!  Remember OPEC is being paid in paper.... (and tell me about their military?).  Has I recall OPEC was the reason we ditched to gold standard, keep our gold here so when "this day comes" OPEC is left holding an empty bag.

Of course there is such a thing as "unintended consequences".

Sun, 02/19/2012 - 11:34 | 2174746 BW
BW's picture

 

March 20, 2012 - Iranian oil bourse will start trading oil in other currencies apart from the US dollar

http://www.dailypaul.com/215073/march-20-2012-iranian-oil-bourse-will-start-trading-oil-in-other-currencies-apart-from-the-us-dollar

Sun, 02/19/2012 - 12:02 | 2174836 The Swedish Chef
The Swedish Chef's picture

The same day Greece has a huge bond rollov...erhh, payment to make. It´s gonna be fun week!

Sun, 02/19/2012 - 12:47 | 2174960 sun tzu
sun tzu's picture

They might not make it to that date

Sun, 02/19/2012 - 11:34 | 2174747 The Swedish Chef
The Swedish Chef's picture

Brent, bitchez! 

 

This weeks no brainer money maker: long Brent. Perhaps short APPL too...

Sun, 02/19/2012 - 11:42 | 2174750 Everyman
Everyman's picture

Ouch, that is going to leave a mark .... on the global oil markets!  Smells like 1972, with an aroma of 1983!  Most people in this day and age have no recollection of the gasoline and fuel prices in the 1970s and 1980s.  That is when they made inflation "ex-energy and ex-food", because of the fluctuations in crude and refined petroleum products.  Get ready to visit yesterday, when oil  defined the market and economies, and not bullshit like CDS and make believe financial products.

If this sticks, we are in a global recession.  This is really the last fucking thing Europe needs now with the Greece situation and the lack of money there.  Can't pay off debt or even the interest if you are paying to keep warm, keep the gas tank filled, or keeping the lights on!

How much do you think inflation will go up in the EU?????

 

Wonder what it looks like economically when playing musical chairs, and the "music stops"???  This is it, and that prediction of $4.30 per gallon in the US this late spring-early summer, just went up to the +$5 a gallon!

Sun, 02/19/2012 - 11:54 | 2174806 Alex Kintner
Alex Kintner's picture

Ah the late 70s in the US -- Gas lines Bitchez!

An hour wait for a 5 gallon limit. Oh sweet youth, I loved thee.

Sun, 02/19/2012 - 12:05 | 2174850 Red Raspberry
Red Raspberry's picture

If you license plate ended in an even number then you could get gas on the even days.

Sun, 02/19/2012 - 12:11 | 2174866 Alex Kintner
Alex Kintner's picture

Oh yeah I forgot. Good call.

Sun, 02/19/2012 - 12:18 | 2174885 Ahmeexnal
Ahmeexnal's picture

That never happened in the US, nor could it ever happen.

Such rationing only happens in places like...Cuba.

 

/sarc

Sun, 02/19/2012 - 14:35 | 2175340 tmosley
tmosley's picture

Empirically we are becoming more and more like Cuba every day.

Sun, 02/19/2012 - 19:27 | 2176078 zerozulu
zerozulu's picture

I doubt we will be able to get free health care or education. Think of a sub-cuba.

Mon, 02/20/2012 - 00:15 | 2176779 Uncle Remus
Uncle Remus's picture

I like old Chevys powered by tractor engines.

Sun, 02/19/2012 - 12:30 | 2174914 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

Yeah I was in some of those lines too.  Even while living in Texas.  The Texans blamed it more on Jimmy Carter rather than OPEC (.gov directing where the fuelk would go).

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