Asia making tough choices on Iranian oil

Jan. 7, 2012 at 10:20 AM
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BEIJING, Jan. 7 (UPI) -- South Korea and Japan said they are seeking alternative sources of oil to comply with U.S. demands that nations cut back on imports from Iran.

Given Asia's dependence on oil from the Middle East, however, their cooperation is tentative. On Thursday, the South Korean government said it would look for alternative sources but insisted it would not sever ties with Iran completely, The New York Times reported Saturday.

The government of Japan has expressed concern over the policy, but the president of JX Nippon Oil and Energy Corp., Yasushi Kimura, said the company, the largest oil refiner in Japan, was discussing increasing imports from Saudi Arabia and other nations.

China is possibly on board with the sanctions the United States is using to pressure Iran to cease work on an alleged nuclear weapons program.

U.S. Treasury Secretary Timothy Geithner is scheduled to visit China and Japan next week with a discussion of Iran high on his to-do list, the Treasury Department announced.

"It's a global chess game," said energy historian Daniel Yergin. "The major buyers are prudently beginning to make alternative plans to reduce their reliance on Iranian oil."

China has already reduced the amount of oil it imports from Iran, but it is unclear if this is due to a price dispute or to comply with the international effort to pressure Tehran.

Currently, 11 percent of China's oil comes from Iran.

"The Chinese have definitely cut back on long-term contracts, but we don't know exactly why. They may feel they will be able to buy cheaper on short-term markets if Iran were to lose its European customers," said Andy Lipow, an oil industry analyst in Houston.

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