Iran clings to Asian oil market as sanctions bite

DUBAI, United Arab Emirates (AP) - When Iran welcomes leaders to a world gathering next week, few will get a grander reception than India’s prime minister. As Tehran tries to offset the squeeze from Western oil sanctions, there is no greater priority than courting energy-hungry Asian markets.

The planned visit by Manmohan Singh, the first by an Indian prime minister in more than a decade, puts into sharp relief the sanctions-easing strategies by Iran - and the political complexities for Washington that limit its pressure on Asian powers needing Tehran’s oil.

Oil purchases by India, China and South Korea - which decided this week to resume Iranian imports - have not covered Tehran’s losses after it was tossed out of the European market in July. But they have given Iran a critical cushion that brings in tens of millions of dollars in revenue a day and means that Iran has dropped only one ranking, to stand as OPEC’s third-largest producer.

The US has pressed hard for Iran’s top customers – China, India, Japan and South Korea – to scale back on crude imports, with some success, offering in return exemptions from possible American penalties. But Washington cannot push its key Asian trading partners too fast or too aggressively and risk economic rifts.

“Despite Western sanctions ... China and Japan will remain major importers of Iranian crude oil and so will India,” said Siddak Bakir, a Middle East and South Asian analyst for IHS Energy in London.

The ability of sanctions to wring concessions over Iran’s nuclear program remains a key divide between Israel and the US and its European partners.

Washington urges allowing more time for sanctions to eat into Iran’s economy, which depends on oil exports for 80 percent of its foreign revenue. Some Israeli leaders have indicated a military attack is a possibility if they conclude the international community has failed to halt Iran’s uranium enrichment. Iran insists it’s not seeking atomic weapons and its reactors are for energy and medical use.