By Pratish Narayanan and Anto Antony
The U.S. may help broker deals with suppliers such as Iraq and Saudi Arabia, the people said, declining to be identified because the information is confidential. Saudi Arabia has already offered to replace Iranian oil supplies if needed, two of the people said. The U.S. is in talks with countries around the world on reducing their dependence on Iranian oil, Victoria Nuland, a spokeswoman at the State Department in Washington, said in an e-mail yesterday.
The assurance follows Iran’s offer to sell extra crude to India as the Persian Gulf nation, OPEC’s second-biggest producer, cuts supplies to some European nations in response to sanctions imposed over its nuclear program. The U.S. and European Union tightened sanctions on Iran last month, restricting trade and financial transactions. They say the program is a cover for developing atomic weapons. Iran denies the accusation.
The international measures have made it difficult for India and Iran to preserve $9.5 billion in annual crude trade, after the Reserve Bank of India dismantled a mechanism used to settle payments in euros and dollars in December 2010. Transactions are currently routed through Turkiye Halk Bankasi AS (HALKB), based in Ankara, which has told Indian refiners it may no longer be able to act as an intermediary, four people with knowledge of the matter said Jan. 10.
Saudi Supplies
India is seeking an additional 5 million tons a year of oil from Saudi Arabia in the year ending March 2013, Junior Oil Minister R.P.N. Singh said in New Delhi yesterday. Saudi Arabia is producing 9.8 million barrels of oil a day and has spare capacity of 2.5 million barrels a day, according to Prince Salman bin Abdulaziz, the kingdom’s deputy oil minister.
Indian refiners including Essar Oil Ltd. (ESOIL), Bharat Petroleum Corp., Hindustan Petroleum Corp. and Mangalore Refinery & Petrochemicals Ltd. (MRPL), all of which buy Iranian crude, plan to increase imports from Saudi Arabia as they diversify supplies, people with knowledge of the plans said in November and January. Saudi Arabia, the largest producer in the Organization of Petroleum Exporting Countries, has told Indian buyers it can replace some of the Iranian crude, two people with knowledge of the matter said July 12. Two of the people with knowledge of the U.S. offer and a third person confirmed this yesterday.
The U.S.’s talks with nations “include helping partners and Allies identify alternative sources of supply, based on the conversations we are also having with supplier nations,” Nuland said in her e-mail yesterday.
Rising Prices
Indian refiners are wary of increasing oil imports from Iran while talks on finding a conduit for payments are continuing, two people with knowledge of the matter said Feb. 21. While they plan to renew term contracts with Iran for the year starting April 1, continued difficulties related to payments may curb supplies, one of the people said.
Oil prices in New York have climbed 7.9 percent this month, while Brent crude in London has jumped 11.7 percent, amid increased confrontation between Iran and the U.S. and its allies. The U.S. and Israel haven’t ruled out air strikes against Iran’s nuclear facilities, escalating tension in a region that’s home to 54 percent of global oil reserves.
Saudi Arabia, the world’s biggest crude oil exporter, is ready to boost supplies to other nations besides India. The country is prepared to help South Korea secure “stable” crude oil supplies if the Asian country’s imports are disrupted by an embargo on Iran, the kingdom’s Oil Minister Ali al-Naimi said in a meeting with South Korean President Lee Myung Bak in Riyadh on Feb. 7. It can meet any future requests and extra demand from South Korea for oil purchases, he said.
IAEA Visit
Iraq will raise supply by 250,000 barrels a day this year, Didier Houssin, director of energy markets and security at the International Energy Agency, said Feb. 20. Iraq produced 2.75 million barrels a day last month, according to Bloomberg estimates.
“There is crude available” to replace Iranian supply, Houssin said. “Buyers are looking to Saudi Arabia, Iraq, Russia. Saudi Arabia has said it’s ready to produce more.”
An International Atomic Energy Agency team visiting Tehran was denied access to Iran’s Parchin military base during two days of meetings that ended Feb. 21. IAEA Director General Yukiya Amano expressed disappointment that the team “engaged in a constructive spirit, but no agreement was reached.”
White House spokesman Jay Carney said Iran’s refusal to allow access to sites where Western intelligence agencies have reported suspected nuclear weapons work “suggests that they have not changed their behavior.” It is “another demonstration of Iran’s refusal to abide by its international obligations,” he said Feb. 22.
