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| China-Japan-Koreas |
| Japan oil refiner hedges Iran bets |
| 2006-03-24 |
| From East Asia Intel, subscription. Even with the UN Security Council tied up in the knots over how to move toward halting Teheran’s nuclear armaments project, Japanese oil refiners were getting skittish about their heavy dependence on Iranian crude. Nippon Oil, Japan’s No. 1 refiner, announced it would cut back on Iran crude by 15 percent this year. Oil is a fungible commodity, but this does send a message. Probably the Chicoms will pick up the slack with the M²s. Whatever other considerations in the decision, Fumiaki Watari, Nippon’s chairman, told the Financial Times: “We have started reducing the percentage of Iranian crude and [are] shifting to other grades. Risks related to the country are getting higher.” Iran supplies 14 percent of Japan’s total oil supply, the third-largest supplier after Saudi Arabia and the United Arab Emirates. Nippon’s decision would mean reducing Iran’s shipments to Japan by 4 percent. Nippon said it would substitute oil from its major suppliers — Kuwait, Russia and Indonesia — to make up the shortfall. Some Teheran spokesmen had already threatened to use “the oil weapon” if the Security Council moved ahead with efforts to halt Iran’s flouting of the International Atomic Energy Agency’s efforts to halt its uranium enrichment program. Teheran says it is for peaceful uses but Washington and its Western allies suspect it is a means of moving to nuclear weapons production. Japanese policymakers have been torn between their traditional opposition to nuclear proliferation and their heavy dependence on imported fossil fuel. Earlier the U.S. and Japan were publicly at odds over Tokyo's proposed investment in a major new Iranian oilfield as the nuclear weapons crisis developed. Washington is said to be trying to counter Iran’s threat to use its oil as a counter weapon to possible UN sanctions to force an end to its nuclear program. European and Asian oil companies, including Royal Dutch Shell, France’s Total and Japan’s Inpex, have contracts in Iran. Iran is increasing its shipment as the largest supplier for China, which is also the world’s second-largest consumer. China and Russia, with their veto of any Security Council action, have said they oppose sanctions and could block any U.S. attempt to impose UN economic sanctions on Iran. Iraq UN redux. This sh*t is getting old. But Iran’s economy, depending on oil and gas for 80 percent of its exports, and importing refined product from Kuwait to keep its own automobiles going, could be highly vulnerable even to limited sanctions, even were they were applied unilaterally by only some of the major oil importers. The U.S. already has sanctions in place, which have partially impacted Iran’s oil industry. |
| Posted by:Alaska Paul |
| #2 It's actualy a very smart move things are going to go Boom in Iran shortly and having another source beforehand makes the pain go away. Pity those who believe there's no problem, they're the ones who will hurt the most when Iranian oil is disrupted, scrambling for the dregts not already contracted for years in advance means you pay the high dollar for the second and third grade crude stocks, and they're in short supply too. |
| Posted by: Redneck Jim 2006-03-24 20:18 |
| #1 Fungible yes, but if an individual user/refinery can avoid risk by paying a higher price to another provider that puts price pressure on the supplier in question. Saddam had to sell a lot of oil at way below market. Risky supplies degrade price. |
| Posted by: 6 2006-03-24 09:59 |