Subject: RE: Sanctions put choker on Iran oil exports - FT - *** oil price impact *** Sanctions as political risk
From: "Neil Callahan" <[email-masked]>
To: "'Michael Andrews'" <[email-masked]>, "'Hunter Biden'" <[email-masked]>, "'Chris Heinz'" <[email-masked]>, "'Devon Archer'" <[email-masked]>, "'Eric Schwerin'" <[email-masked]>, "'Rob Mitchell'" <[email-masked]>
Date: Tue, 14 Sep 2010 11:00:03 -0400

We have a few commodity trading firms that we could take something too . . .
very interesting.

----------------------------------------------------------------------------
--------------

Neil Callahan

Rosemont Seneca

401 Greenwich Street, Suite 400 | New York NY 10013 | 212-933-9965 |
212-796-4037

1010 Wisconsin Avenue, Suite 705 | Washington DC 20007 | 202-333-1880

917-945-9516 (mobile) 

866-749-8879  (fax) 

From: Michael Andrews [mailto:[email-masked]] 
Sent: Tuesday, September 14, 2010 10:57 AM
To: Hunter Biden; Chris Heinz; Devon Archer; Eric Schwerin; Neil Callahan;
Rob Mitchell
Subject: Sanctions put choker on Iran oil exports - FT - *** oil price
impact *** Sanctions as political risk

The problems to buying Iranian crude are mounting in Europe and very soon
would extend to Japan."

 

 

Sanctions put choker on Iran oil exports

By Javier Blas in London

Published: September 13 2010 19:44 | Last updated: September 13 2010 19:44

Iran faces mounting difficulties selling its crude oil with tighter
sanctions depriving the country of essential shipping and banking services.

Tehran's problems have worsened after the US and the European Union imposed
their own wide-ranging sanctions in July, going far beyond the restrictions
contained in earlier UN resolutions. Although the measures, implemented
because of Tehran's nuclear ambitions, did not focus on the oil exports that
drive Iran's economy, traders said they were having an effect.

Iran is the world's fourth-largest oil exporter, with Japan, China, India
and South Korea its largest clients. Italy and Spain are the top European
buyers. The US has not bought crude oil from Tehran since the Islamic
revolution of 1979.

The difficulties have yet to cause a fall in Iran's oil exports but traders
warn of a reduction in the next few months if the problems are not solved.

The International Energy Agency, the western countries' oil watchdog, said
last week that Iran might have to resort to storing oil at sea in tankers
"as new sanctions have the unintended consequence of squeezing crude
buyers".

Traders and oil company officials said European and Middle Eastern banks
have all but stopped issuing letters of credit - an instrument used in trade
- with Iranian financial institutions. This makes it very difficult to
transact payments for oil sales. Shipping companies are also refusing to
send tankers to Iranian oil terminals, while insurers are reluctant to cover
cargoes, they said.

<http://www.ft.com/cms/s/8efd517e-bf5d-11df-965a-00144feab49a,dwp_uuid=c9180
7cc-1c27-11dd-8bfc-000077b07658,print=yes.html>
<http://www.ft.com/cms/s/8efd517e-bf5d-11df-965a-00144feab49a,dwp_uuid=c9180
7cc-1c27-11dd-8bfc-000077b07658,print=yes.html> Iran-sanctions-graphic
<http://www.ft.com/cms/s/8efd517e-bf5d-11df-965a-00144feab49a,dwp_uuid=c9180
7cc-1c27-11dd-8bfc-000077b07658,print=yes.html> "Shipping and letters of
credit are the two problems," said an official at a western oil company
which traditionally buys Iranian crude. "It is getting increasingly
difficult." An official at a trading house said: "The letters of credit
difficulties could soon start to have a noticeable impact on Iran's export
volumes."

US officials have fanned out across the world, warning against falling foul
of new American legislation imposing penalties on any banks doing business
with blacklisted Iranian entities.

Traders said they were still using Asia-based banks to open letters of
credit, but sanctions announced recently by Japan and South Korea will
obstruct this avenue. Chinese banks will probably then become the only
source of finance for any dealings with Iran.

The oil ministry in Tehran declined to comment, referring to an interview
last week in which Mohsen Khojasteh-Mehr, the deputy oil minister, denied
any difficulties.

"The demand situation in the global market is in such a way that Iran even
puts conditions to sell its crude," Mr Khojasteh-Mehr was quoted as saying
by Mehr, an Iranian news agency.

Iran produced 3.7m barrels a day of crude oil in August, the latest data
available, marking one of the lowest monthly output levels since early 2003.
The bulk of the drop is due to Opec's mandated production cuts in late 2008
and early 2009.

These were agreed in a collective effort by the cartel to boost oil prices.
But recently, production levels have increased in other Opec nations, while
output in Iran has continued to decline. The country is also known to have
stored oil at sea in tankers recently.

David Kirsch, director of market intelligence at PFC Energy, the
consultants, said banks were unwilling to take the risk of dealing with
Iran.

"Washington would not push forward for a formal crude oil embargo, but if
denying Iran access to the financial market has an impact on oil sales, that
is not seen as a problem," he said. "The problems to buying Iranian crude
are mounting in Europe and very soon would extend to Japan."

Additional reporting by Najmeh Bozorgmehr in Tehran and Daniel Dombey in
Washington