With Western nations unilaterally ramping up sanctions on this volatile state, Iran is growing increasingly dependant on Asian countries for it’s oil trade.
Since US and EU legislation came into play last year, Iran’s oil exports were have halved from a 2001 peak of 2.2 million barrels a day, grim tidings for a state where 80% of total export revenue is generated by this fossil fuel. According to a recent report from the from the Economist’s Intelligence Unit (EIU) almost all of Iran’s oil exports are being purchased by four Asian countries. These countries comprise of Asia’s biggest economies; India, China, South Korea and Japan.
That being said, the report also noted that there was a steep drop in the amount of oil purchased by each of these countries from the previous year. Iran is increasingly dependent on the custom of long-time trade partner and fuel guzzling colossus China. In 2013, the former communist state is expected to be the destination of over half of Iran’s oil exports.
Legislation changes affecting repatriation of oil revenues may also be a factor in attracting Asian buyers to Iranian oil. With dollar wire transfers an increasing rarity, more and more exporters are being forced to accept payment in Asian currencies such as the rupee and yuan.
Genourous payment terms extended by Iran to some Asian customers may also be a mitigating factor- allowing select buyers up to six months in which to pay for their oil over the standard 60 days was a powerful enough incentive for many to shrug off western calls for an international embargo.
However the Tehran won’t be able to count on this eastern support for much longer. Indian officials have hinted that they plan to slash imports 10-15% in 2013, and South Korea and Japan has pledged to continue to reduce their intake of Iranian oil in 2013- Seoul as much as 20% down by May.