South Korean officials said yesterday that they will continue working with the US to reduce oil imports from Iran after US President Barack Obama approved potential sanctions against countries that continue to buy Iranian oil.
South Korea is one of several major importers of Iranian oil that have not received exemptions from the US sanctions.
Obama announced on Friday that he is plowing ahead with the potential sanctions, which could affect US allies in Asia and Europe, as part of a deepening campaign to starve Iran of money for its disputed nuclear program.
The sanctions aim to further isolate Iran’s central bank, which processes nearly all of the Iran’s oil purchases, from the global economy. Obama’s move clears the way for the US to penalize foreign financial institutions that do oil business with Iran by barring them from having a US-based affiliate or doing business in the US.
Obama’s goal is to tighten the pressure on Iran, not allies, and already the administration exempted 10 EU countries and Japan from the threat of sanctions because they cut their oil purchases from Iran. Other nations have about three months to significantly reduce such imports before sanctions would kick in.
Foreign ministry officials in South Korea said yesterday that they expect to reach an agreement with Washington by late June on reducing oil imports from Iran. The officials declined to be named because discussions were still under way.
South Korea has already restricted financial dealings with more than 200 groups and individuals with suspected links to Iran’s nuclear program. Seoul relies on Iran for up to 10 percent of its oil.
Energy-starved India, which relies on Iranian oil for 12 percent of its power needs, has said that while it would accept UN sanctions against Iran, it does not heed unilateral sanctions such as those imposed by the US and EU.
Nevertheless, New Delhi has not remained completely immune to sanction pressures and is slowly easing its dependence on Iranian oil, with a slow decline in Iranian oil imports. The Western sanctions also have made it harder for Indian companies to pay for Iranian oil, with international banks unwilling to handle transactions from Tehran.
In February, India irked the West by arranging to make 45 percent of its yearly US$11 billion oil payments to Iran in Indian rupees, with the rest paid in a barter system as Tehran seeks Indian-made machinery, iron and steel, minerals and automobiles. Barter might also be in wheat, soybean and other commodities.
The government has said simply that India needs the Iranian crude, noting that its aging refineries are configured for Iranian crude, and retrofitting them would be costly.
On Thursday, India along with its BRICS bloc partners China, Russia, Brazil and South Africa said they believed negotiations were the best way to resolve worries over Iran’s nuclear program, while also supporting “Iran’s right to peaceful uses of nuclear energy.” The US sanctions are set to take effect on June 28. A European oil embargo, approved in January, starts in July.
Put together, Obama administration officials contend Iran is about to face its most severe economic pressure ever.
The US imports no oil from Iran.
The main importers of Iranian oil that have not received exemptions from the US are China, India, Turkey, South Africa and South Korea. The administration would be loath to hit a close friend like South Korea or India, or a NATO ally like Turkey, with sanctions, and is working with those countries to reduce their imports.