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Thursday, April 19, 2012

Warnings Mount Against Oil Embargo:
Iran Shock to World Economies

TEHRAN (Dispatches) – Iran's Oil Minister Rostam Qassemi warned of a dramatic rise in crude prices if planned EU sanctions on the country are put into effect.
The minister underlined the significance of the Iranian oil in the international market, "That is why an oil embargo on Iran immediately increased the global oil prices by 20%," he said.
"And if this trend continues (news sanctions are imposed), the oil market will definitely be different from now," Qassemi told the 17th International Oil, Gas, Refining and Petrochemical Exhibition here.
Iran has been exporting about 2.5 million barrels of crude oil per day (bpd) as the second largest oil producer after Saudi Arabia in the Organization of Petroleum Exporting Countries (OPEC).
The International Monetary Fund (IMF) warned that crude oil prices may spike by up to 30% if Iranian supplies are disrupted, causing "serious consequences" for the global economy.
The standoff between Iran, the world's second-largest supplier of oil, and the West over the Islamic Republic's nuclear program has always been seen as a flashpoint that could sharply increase world crude prices.
"Clearly it would be a shock to economies if there was a major shortage of exports of oil out of Iran, it would certainly drive up prices for a period of time," IMF Managing Director Christine Lagarde said.
The IMF has calculated that an interruption in oil supplies from Iran could increase oil prices by 20 to 30 percent, said Lagarde.
"A sudden and brutal rise in the price of oil" from Brent crude's current levels of $125 a barrel "would have serious consequences on the global economy" until other oil-exporting nations were able to bridge the gap, she added.
Iran has already stopped oil exports to Germany, Greece, France, Spain and the UK. Tehran says it is now considering halting crude sales to Italy.
Iran’s decision to cut crude exports to certain European countries was made after the EU foreign ministers agreed on January 23 to ban oil imports from Iran and freeze the assets of the country’s Central Bank across the EU.
Last month, crude prices reached a peak since May after Tehran’s decision to embark on countersanctions against the European countries, pushing gasoline prices in the U.S. and the UK to record highs.
President of Russia's second largest oil company, Lukoil, warned Tuesday that the Western sanctions on the Islamic Republic’s oil sector will further drive up the global prices of crude.
Vagit Alekperov told Russia’s Channel One television network that fears over the embargoes on the Iranian oil have already pushed up oil prices.
He also noted that it is not unlikely for the oil prices to rise even further given the fact that Iran has halted its oil exports to certain European states.
On Wednesday, Japanese refiner Showa Shell renewed its term contract with the National Iranian Oil Co, with delivery starting in May.
Under the terms of the new contract, which is effective from April with volumes to be delivered in May, Showa Shell's loadings of Iranian oil are expected to fall below March volumes, sources familiar with the matter told Platts.
They said Showa Shell's renewed contract came as time was running out for the company to make its loadings in April after months of delays in renewing its term contract.
Showa Shell is Japan's biggest buyer of Iranian crude, importing 100,000 b/d of the crude under its previous contracts that expired at the end of March, sources said. Showa Shell is owned by Shell (35.04%), Saudi Aramco (14.96%) and public investors (50%).
Because a VLCC takes 18-20 days to make a voyage from Iranian loading terminals to Japan, any crude loaded in April will not reach Japan till May.
Other Japanese buyers of Iranian crude are expected to conclude soon their import contracts starting in April, the sources said.
The renewal of Showa Shell's contract came as Japanese refiners cleared immediate shipping insurance concerns for cargo and hull damage, which have been capped at Yen 30 billion ($372 million) because of the complex EU rules regarding insurance cover by EU-based Protection and Indemnity Clubs.
Japan is so far the only Asian country to have been granted a waiver by the U.S. to continue importing Iranian crude oil. Ten European countries have already been granted exemptions by Washington, which wants to make it harder for Iran to place barrels in Asia that it would otherwise sell into the European market.
Another source with a shipowner said conclusion of the Showa Shell contract was a significant development if Showa Shell has signed the new contract to buy Iranian crude

Turkey: Other Countries Paying the Price

TEHRAN (Dispatches) – Turkey's exports to Iran have fallen 20% this year and the cost of imported oil has soared, Turkey’s Economy Minister Zafer Caglayan said, adding the country is bearing the brunt of U.S.-led sanctions.
The economic cost “is borne by Turkey,” not just by Iran, Caglayan told reporters in Washington. “Other countries pay the price of sanctions, too.”
The price of oil has risen as efforts to restrict Iran’s oil exports have fueled global insecurity over energy supplies. Turkey paid $54 billion for energy imports last year, a 40% increase over 2010, he said.
Oil climbed to a two-week high in New York as the International Monetary Fund bolstered its global growth forecast. Crude oil for May delivery advanced $1.42, or 1.4%, to $104.35 a barrel on the New York Mercantile Exchange on Tuesday. Crude is up 5.8% this year.
The U.S. and EU have imposed penalties restricting trade with Iran since last November in an effort to pressure Iran to give up its nuclear energy program.
Iran, which says its program is for civilian energy and medical research, met representatives from the U.S., EU, China and Russia on April 14 in Istanbul in an effort to restart stalled negotiations, and agreed to meet again in Baghdad next month.
Turkey was the sixth-largest importer of Iranian crude during the first half of 2011, buying 182,000 barrels a day, according to the U.S. Energy Department. In that period, Turkey accounted for seven percent of Iran’s oil exports, according to the U.S. data.
The five biggest importers were China, Japan, India, South Korea and Italy. Iran is the second-biggest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia.
Caglayan said Turkey isn’t bound by unilateral U.S. sanctions in the same way it must abide by United Nations sanctions.
Under a U.S. law enacted Dec. 31, Iran’s oil buyers have until June 28 to assure the State Department that they will “significantly reduce” their dependence on Iranian imports. The U.S. granted 11 exemptions last month to Japan and EU countries for having promised reductions.
The occupying regime of Israel's deputy foreign minister has called for stringent sanctions against Iran to be brought forward.
Danny Ayalon said no further leeway should be given to the Iranians, and that an EU embargo on Iranian oil and additional tougher sanctions, due to take effect from 1 July, should begin now.
Speaking to foreign media in Jerusalem Al-Quds, Ayalon said: "If there is one thing the Iranians pay attention to, it is additional sanctions. July 1 for them is something they will try to avoid almost at any price. So if we advance July 1 to now, I think there is a good chance to get a positive effect in Iran, and I believe that would have a good effect on any future dialogues with them."
Ayalon would not be drawn on how much time the additional sanctions would need to be given to show an impact but said: "There is a toll on the Iranian economy and political stability.
Meanwhile, the Zionist regime's deputy prime minister, Dan Meridor, acknowledged in a television interview that Iran's President Mahmoud Ahmadinejad had never promised to "wipe Israel off the map", contrary to repeated claims.
"They didn't say 'We'll wipe it out', but 'It will not survive, it is a cancerous tumor, it should be removed'. They repeatedly said 'Israel is not legitimate, it should not exist'," Meridor told al-Jazeera.
In 2005, Ahmadinejad quoted the founder of the 1979 Islamic Revolution as saying Israel "must vanish from the page of time", but his remarks were widely mistranslated.

Tehran Optimistic About Future of Talks

TEHRAN (Dispatches) -- Iran said on Wednesday it is optimistic about the future of its negotiations with the Group 5+1 (the five permanent UN Security Council members plus Germany), but meantime wants the world powers to prove their words in action.
"We are optimistic about the future of negotiations and want the other side to show its words in action," Foreign Ministry spokesman Ramin Mehmanparast said in a meeting with Croatian reporters and journalists in Zagreb.
He described the atmosphere dominating the last round of negotiations between Iran and the G5+1 in Istanbul as positive, saying the two sides have announced their readiness for continued talks and cooperation in nuclear grounds.
"Maybe the most important part was the two sides' agreement to cooperate with each other on the basis of the NPT (Non-Proliferation Treaty)," Mehmanparast said, adding that other details are due to be discussed in the second round of negotiations in Baghdad next month.
On Tuesday, Foreign Minister Ali Akbar Salehi expressed optimism about the outcomes of the talks between Iran and six major world powers in Istanbul and the settlement of Tehran’s nuclear issue.
“We are optimistic about the outcomes of the negotiations and their continuation in Baghdad in line with resolving the nuclear issue while asserting Iran's absolute and legitimate rights,” Salehi said in a meeting with Egyptian cultural and media figures here.
He added that the Istanbul talks may be considered as a “starting point for an end to Iran's nuclear issue”.
Salehi lauded Iran's great potential of self-sufficiency and self-reliance and emphasized that the replacement of an attitude of confrontation by Western states with that of collaboration was the significant achievement of the latest talks.
“During the Istanbul talks, it was proven that the Western countries are unable to force Iran to surrender and give up its absolute and legitimate rights to use peaceful nuclear energy by exerting political and economic pressure,” Salehi pointed out.
He reiterated that despite the pressure, Iran is making progress in the nuclear energy program, including the production of fuel for the Tehran Research Reactor.
On April 7, deputy head of the Atomic Energy Organization of Iran (AEOI) Muhammad Ghannadi said Iranian researchers have succeeded in producing fuel for the Tehran Research Reactor “according to schedule”.
Iran placed the first indigenous fuel rods into the heart of the Tehran Research Reactor on February 15. The fuel rods were produced at the Isfahan nuclear facility and transferred to the Tehran Research Reactor under the supervision of the International Atomic Energy Agency (IAEA).
By placing nuclear plates into the Tehran reactor, Iran has taken the final step in completing the nuclear fuel cycle.

New Photos Show:
U.S. Troops Posed With Afghan Body Parts

LOS ANGELES (Dispatches) -- The Los Angeles Times published photos Wednesday of U.S. soldiers posing with what the newspaper said were bodies of Afghans -- sparking outrage and condemnation from U.S. military officials.
Two photos published by the paper are among 18 provided by a U.S. soldier, who wanted "to draw attention to the safety risk of a breakdown in leadership and discipline", The Times reported.
The military said an investigation is under way.
The photos, from incidents in 2010, represent "a serious error in judgment by several soldiers who have acted out of ignorance and unfamiliarity with U.S. Army values," NATO'S International Security Assistance Force said in a statement. Gen. John Allen, the ISAF commander, condemned the photos, as did U.S. Defense Secretary Leon Panetta.
"These images by no means represent the values or professionalism of the vast majority of U.S. troops serving in Afghanistan today," said Pentagon spokesman George Little.
One image shows a member of the military in front of what appears to be the body of an Afghan. The photo shows the head and what may be his hand on the American soldier's shoulder. Another soldier appears to be looking down at the body.
"A soldier from the Army's 82nd Airborne Division with the body of an Afghan insurgent killed while trying to plant a roadside bomb," the caption reads. "The photo is one of 18 provided to The Times of U.S. soldiers posing with corpses."
The second photo shows a group of people, including some American soldiers, standing above what appear to be legs from a dead body. One U.S. soldier is smiling and giving a double thumbs-up, while another is smiling at the camera as well.
The paper says the photo was from 2010, when the division arrived at a police station in Zabol province and inspected body parts. "Then the mission turned macabre: The paratroopers posed for photos next to Afghan police, grinning while some held --- and others squatted beside --- the corpse's severed legs."
"An investigation that could lead to disciplinary measures is under way," Little said. "Anyone found responsible for this inhuman conduct will be held accountable in accordance with our military justice system."
"The secretary is also disappointed that despite our request not to publish these photographs, the Los Angeles Times went ahead. The danger is that this material could be used by the enemy to incite violence against U.S. and Afghan service members in Afghanistan," Little's statement added. "U.S. forces in the country are taking security measures to guard against it."
In the article, Times Editor Davan Maharaj said, "After careful consideration, we decided that publishing a small but representative selection of the photos would fulfill our obligation to readers to report vigorously and impartially on all aspects of the American mission in Afghanistan, including the allegation that the images reflect a breakdown in unit discipline that was endangering U.S. troops."
Lt. Col. Jimmie Cummings, an ISAF spokesman, said The Times tipped off military officials to the photos in March, triggering an investigation. Cummings did not say where the photos were taken or how many people are under investigation.
"Such actions are morally repugnant, dishonor the sacrifices of hundreds of thousands of U.S. soldiers and civilians who have served with distinction in Afghanistan, and do not represent the core values of the United States or our military," the U.S. Embassy in Kabul said in a statement.
In describing one photo not shown in the paper, The Times said two soldiers held a dead man's hand with the middle finger raised. "A soldier leaned over the bearded corpse while clutching the man's hand. Someone placed an unofficial platoon patch reading 'Zombie Hunter' next to other remains and took a picture."
It is the latest in a string of incidents that have plagued the U.S. military in Afghanistan this year.
In January, a video posted on a website showed four U.S. Marines urinating on corpses of several Afghans.
A month later, ISAF personnel at Bagram Air Base improperly disposed of Islamic religious materials, including copies of the Holy Qur'an, in what U.S. officials described as an unintentional error.
U.S. troops left a remote outpost in Kandahar province's Panjwai district in March and went house-to-house, gunning down villagers. Only one soldier has been charged with 17 murders in the shooting rampage.
Perhaps the most notorious incident involving photos of U.S. troops over the past decade took place in Iraq in 2004. Images of U.S. military personnel abusing naked and restrained prisoners in the facility outside Baghdad shocked the world.
In public, NATO officials are not only satisfied with the 11th year of progress of the Afghanistan war; they’re downright thrilled. Gen. John Allen reiterated Tuesday that he is “enormously proud” of how the Afghan military reacted to an entirely unpredicted city-wide attack on Kabul, which led to 18 hours of gunfire targeting every major site in the city.
Privately, however, the subject of the upcoming “jumbo meeting” of NATO foreign and defense ministers is expected to center around the ever-worsening security conditions nationwide and the inability to predict even major coordinated attacks.
Even the public claims of “no strategy changes” don’t seem to be holding up, as the U.S. is reportedly preparing to launch a massive offensive against Kabul, apparently aimed at “shoring up the defenses” in the city.
This latest spring offensive follows in the old formula for the war, with major offensives announced to target whichever part of the country is currently the most under siege. That more than ten years of activity haven’t secured any of the other targets in a meaningful way appears lost on them.