Oil Pops Higher After Iran Balks At Nuclear Talks [Imports from Iran fall about 493,000 b/day]

The odds of conflict with Iran continue to rise as it appear talks that could be the last chance to stop events from spinning out of control seem to be dead on arrival. Oil prices, which really looked beyond the symbolic Iranian cut of oil to the UK and France, seemed to start to focus a bit more on latest deal to save Greece and a surging stock market. Yet oil already up got another dollar spike when Bloomberg News reported that Iran’s foreign Minister basically said that talks about Iran’s nuclear program were off the table. Many had hoped that the resumption of talks between the International Atomic Energy Agency and Iran was a possible way out of this crisis. Those dreams were seemingly put to rest when a spokesman for the Iranian Foreign Ministry Ramin Mehmanparast, said that when it comes to Iran’s “right to peaceful nuclear energy there is nothing to negotiate.” So much for the olive branch, it seems the tree just fell down.

The pressure on Iran is rising as Bloomberg News reports that, "China, the biggest buyer of Iranian crude, cut purchases to the lowest level in five months in January even as its total oil imports rose after trading companies in the two nations failed to renew supply contracts. Imports from Iran fell to 2.08 million metric tons, or about 493,000 barrels a day, Beijing-based General Administration of Customs. That’s the lowest rate since August and 14 percent less than the average 575,000 barrels bought daily in December. China’s total crude imports rose 6.8 percent from a month earlier to 5.5 million barrels a day."

"In other words, China and Japan are putting the screws to Iran to buy oil at a discount".
"China maintains diversity of oil suppliers, including nations such as Angola and Iran, according to data compiled by Bloomberg. Not relying excessively on any one country serves China’s security and strategic interests, according to Dean Cheng, a research fellow at the Asian Studies Center of the Heritage Foundation, a conservative Washington policy institute..“As for the veto, as long China is willing to pay market rates for Gulf crude, relations will decline only so far with the Gulf,” he said by e-mail. China is “very reluctant to see further toppling of dictators, which essentially increases instability and unpredictability.” -China’s UN Veto on Syria May Not Hurt Ties With Gulf Oil Nations
"China currently maintains a strategic oil reserve equivalent to 30 days of imports, compared with 90 days in many developed countries. The United States' strategic oil reserves exceeded 700 million barrels in 2009, enough for 150 days of oil consumption, according to Zhou."
"To reduce the gap, China set up a national oil reserve center to build and manage its strategic reserves in 2007. Four strategic oil reserve bases in the coastal cities of Dalian, Qingdao, Ningbo and Zhoushan have already been built, and construction on another eight bases will be completed by the end of 2012.

"Oil prices could go much higher after the country finishes building the bases. Even at current prices, the cost of increasing oil reserves is much greater than that seen in the past," Lin said.news.xinhuanet.com
The NYTimes writes: "The United States has not purchased oil from Iran for many years, but Mr. Obama has stopped short of advocating a global total embargo, which could lead to confrontations at sea. The hard line taken by President Nicolas Sarkozy of France and Chancellor Angela Merkel of Germany has been the surprise in the latest chapter in the long-running Iranian nuclear crisis. Their operating assumption is that if the economic cost is high enough, the supreme leader will fold. "
Confronting Iran in a Year of Elections-NYTimes wrote: "Hours after Jimmy Carter left office and the more hawkish Ronald Reagan came in, Iran freed the hostages taken at the American Embassy. When Mr. Obama or his opponent is sworn in on Jan. 20, 2013, no one expects Iran’s nuclear complex to be packed up and shipped out."

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.