AP: The Obama administration is urging China, Japan and other countries to scale down their Iranian petroleum purchases to put pressure on Iran while the U.S. and others consider toughening economic sanctions on the regime. The Associated Press
By BARRY SCHWEID
WASHINGTON (AP) — The Obama administration is urging China, Japan and other countries to scale down their Iranian petroleum purchases to put pressure on Iran while the U.S. and others consider toughening economic sanctions on the regime.
"We are telling them not to engage in business as usual," an administration official said Wednesday.
The official, who discussed the tactics on condition of anonymity because he was not authorized to talk about the campaign publicly, said it was part of an effort to pressure Iran for what he said were repeated violations of U.N. resolutions aimed at its nuclear programs.
"We are asking them to cut their reliance on Iran and we are having some success," the official said. The effort was first described in a Wall Street Journal report.
The official declined to identify which countries were agreeable to stepping in to replace the oil from Iran, but Saudi Arabia and the United Arab Emirates are logical candidates. The Saudis are uneasy about Iran's nuclear programs and the kingdom already is a major trading partner with China.
China is a leading buyer of Iranian oil, and last week Premier Wen Jiabao said China intends to strengthen its cooperation with Iran. He made his remarks during a meeting with visiting Iranian first Vice President Mohammad Reza Rahimi.
Wen said cooperation with Iran in trade and energy has widened and deepened.
Both China and Russia have indicated they would not support imposition of new U.N. economic sanctions on Iran. Both countries have veto power in the Security Council.
Iran denies it is trying to make nuclear weapons and says its programs are for civilian purposes.
Analysts say the large gap between the relatively low current global demand and oil producers' ability to pump more barrels potentially increases Washington's leverage over Iran's oil industry.
In effect, it's easier to cut Iran out through sanctions or behind-the-scenes pressure when there is plenty of global supply than when demand — and prices — are at a peak.
Last month, Mohammed al-Shatti, a member of Kuwait's delegation to OPEC, signaled that some oil producers would be willing to pick up Tehran's slack if needed, telling a local newspaper that the cartel's "spare capacity would lessen the negative effects on prices in case of any stoppage of oil supplies from Iran."
Saudi Arabia, OPEC's top producer and a strong U.S. ally, could make up for all of Iran's exports, given existing global demand. The kingdom recently boosted its production capacity to 12 million barrels a day — about 50 percent more than it's currently producing.
Iran, OPEC's second-biggest producer, exported about 2.4 million barrels daily in 2008.
Any decision by America's Arab allies to unilaterally boost oil production could cause a rift within OPEC, as each member of the bloc agrees to cap its output at predetermined quotas. Those quotas, however, are routinely flouted by many of the group's members.
AP business writer Adam Schreck reported from Dubai.
