(CNSNews.com) – Some of Iran’s biggest oil customers are finding ways around U.S. and European restrictions on buying oil from Iran, just months after the Obama administration granted them an exemption from financial sanctions for reducing the amount of Iranian crude oil they buy.
At the end of June, countries buying oil from Iran became eligible for new U.S. sanctions on their financial institutions involved in energy transactions with Tehran – unless the administration certified that they had cut their purchases of Iranian oil “significantly.”
Secretary of State Hillary Clinton made such a determination right on deadline in the case of China – Iran’s biggest oil customer by far – having done so earlier for 19 other countries, including the energy-hungry Asian markets of Japan, India and South Korea. The waivers are for a potentially renewable period of 180 days.
As those new U.S. measures entered into force, so too did a European Union prohibition on E.U.-based insurance firms providing coverage for tankers carrying Iranian oil. The various sanctions are designed to pressurize Tehran to end suspect nuclear activities.
Since the majority of the world’s tankers are underwritten by insurance groups based in London, the E.U. ban hit hard.
Now, however, some governments (Japan, India) are offering their refiners state-backed insurance while some (China, South Korea, India) have asked Tehran to deliver oil on Iranian tankers, making Iran liable for the insurance costs.
Together, China, India, Japan and South Korea account for well over half of Iran’s crude exports.
In its latest report, released on August 10, the International Energy Agency said total Iranian oil exports fell to an estimated one million barrels a day in July, down from 1.74 million the previous month. Last year, Iran was exporting an average of 2.5 million barrels a day.
But industry figures expect to see increases through the fall, as various sanctions workarounds begin to take effect.
Already, Chinese imports of Iranian crude have been rising each month since a contract dispute between China’s state-controlled Sinopec and Iran’s National Iranian Oil Co. was settled at the end of March.
In mid-July, Geneva-based Petrologistics reported that China had imported an estimated 590,000 barrels of crude oil a day from Iran during the first two weeks of that month, compared to an average 430,000 barrels a day in June.
China has consistently opposed unilateral sanctions against Iran, saying its import of Iranian oil is legitimate.
“According to international law, a country has no right to impose its domestic law on other countries while a country has no obligation to observe domestic law of other countries,” the People’s Daily, an organ of China’s Communist Party, said in an editorial earlier this month. “The U.N. Security Council neither bans any country to conduct oil trade with Iran, nor orders any country to completely stop financial cooperation with Iran.”
On Friday, President Obama signed new legislation aimed at closing loopholes in earlier law and providing for additional penalties for those helping Iran’s oil and gas, financial and shipping sectors. The Iran Threat Reduction and Syria Human Rights Act had earlier passed in the House by a 421-6 vote, and in the Senate by unanimous consent.
Also on Friday, the administration announced sanctions – under separate legislation – against the Syrian state-run oil company Sytrol for doing business with Iran’s oil sector.
Rep. Ileana Ros-Lehtinen (R-Fla.), chairman of the House Foreign Affairs Committee and co-author of the new Iran legislation, praised the Sytrol decision but said too many others were “getting a free pass for their ongoing business dealings with Tehran.”
“Time is of the essence,” she said. “The longer that we wait, the more room South Korea, China and other Iranian crude oil importers will have to either continue enabling the Iranian regime or to backslide on previous commitments to substantially decrease crude oil imports, and even repatriate hard currency to Tehran.
“We need to stop making exceptions and impose the strongest pressure against Iran that we can,” Ros-Lehtinen added.
“We are working with countries around the world to reduce their purchases of Iranian crude and encourage all countries around the world to apply – abide by U.S. sanctions and to reduce their purchases of Iranian crude and other petroleum products,” a senior State Department official told a teleconference briefing on Friday.