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IRAN


 

 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 136,833 107,522 114,100 34
         
GNI per capita
 US $ 2,000 1,710 1,680 110
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 126 - (26/06/12)

The Moscow talks on the Iranian nuclear programme have failed, leaving for now little room for further negotiations. Sanctions are going to tighten in July and despite the Asian market more or less holding Iran is facing the halving of its oil revenue in the medium term.

Failure in Moscow
Like Istanbul and Baghdad before, the Moscow meeting over the Iranian nuclear programme crisis ended with no significant progress. What is worse, negotiations reached close to collapse in Moscow, as the only agreement was for a further meeting of technical experts to look into a possible future deal. There is no agreement for further political meetings. Observers believe that the Iranians might see no point in negotiating before the forthcoming US elections, as they would not be able to extract the concessions they want from the west: a reduction of the sanctions in particular would be very embarrassing for President Obama in the middle of an electoral campaign. The Iranians may also have calculated that the risk of an Israeli attack is no longer so high given the deep divisions that have emerged in Israel over the issue.

Europe sanctions
The Iranians however now face the full weight of EU sanctions, which will take effect in July and will further reduce oil exports for a total of 1.5 million bpd compared to the pre-sanctions level. New US sanctions will also hit the Iranian Central Bank, putting additional pressure on the already weakened rial. As of 21 June the rial had reached 18,300 to a dollar, up 270 from just a day before. Iran is also losing Russian support because President Putin has been upset that no progress was made in Moscow. The Iranians have also to worry about the situation in Syria and Iraq, where friendly regimes are under siege. Observers however mostly believe that the Iranians will want to show that they cannot be intimidated and will instead adopt a more aggressive posture in foreign policy.

Asian market holds while Europe purges Iranian oil out
A positive note for Iran is the fact that China has resumed large scale imports of oil. In May it imported 524,000 bpd, compared to 390,000 bpd in April, although that level is still slightly less than it imported in May 2011 (537,000 bpd). The resumption is due to Iran and China resolving a payment dispute that badly affected oil sales in the first quarter of this year. Observers believe that China may obtain a significant discount on the price of its purchases. The Indians too have finally approved a scheme to pay for Iranian crude in rupees; in practice the rupees will only be used by Iran to purchase Indian goods which is an added bonus for India. However, with the new sanctions the Indians have to face the problem of how to insure the tankers carrying the crude; the Iranians are talking of providing insurance themselves. The Koreans are stopping imports exactly for this reason. Only Japan is maintaining imports of Iranian oil after the parliament approved a bill to insure tankers carrying Iranian crude. Iranian oil exports are forecast to fall to 1.5 million bpd by end June, 1 million bpd lower than the pre-sanctions level and up to 100,000 bpd lower than in May. It will fall further in July. With almost all storage capacity already being utilised, Iran may have soon to shut down its production. Iran has allied with Iraq to try and push oil prices higher, but rising Iraqi production, Libyan recovery, a sluggish world economy and Saudi overproduction have all conspired to push oil prices actually down in recent months.

Iranian exports of gasoline have also been falling in recent months, although these might just be market fluctuations for a country that until two years ago was importing loads of gasoline for its internal market.

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