Abstract
As the mainstay of Iran’s political economy, the oil industry has been vital to the Middle Eastern country’s security and wellbeing in contemporary history. This chapter discusses how international sanctions created a whole host of troubles for Iran’s oil industry long before the Trump administration in the United States moved to bring Tehran’s crucial crude exports to nil after Washington unilaterally abandoned the landmark nuclear deal in May 2018. In spite of their increasingly growing dependence on energy resources in the oil-rich Middle East, East Asian countries were ineluctably left with little option but scale back their crude oil purchases substantially from Iran in the wake of new international economic and financial restrictions imposed on Tehran. As a consequence, the Persian Gulf country had to offer certain benefits and perks, including concessional crude oil, in order to retain some of its major Asian customers, China in particular.
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Notes
- 1.
Miyagawa, p. 141.
- 2.
Togo, pp. 302–303.
- 3.
“LG, Samsung, Daewoo Worry about Fallout from Iran Sanctions,” Korea Times, August 12, 2010; and “U.S. Exempts Korea from Iranian Oil Sanctions,” Korea Herald, June 12, 2012.
- 4.
“Varedat naft kore jonoobi az Iran 8 barabar shod” [South Korea’s Oil Imports from Iran Increased Eight-fold], Rahemardom, January 16, 2017, p. 5; and “US Exit from Iran Deal May Affect South Korea’s Oil Imports,” Korea Times, May 9, 2018.
- 5.
Bernard D. Cole, China’s Quest for Great Power: Ships, Oil, and Foreign Policy (Annapolis, MD: Naval Institute Press, 2016), p. 146.
- 6.
“China Unlikely to Follow US Oil Sanctions on Iran,” Global Times, May 4, 2019.
- 7.
“Bazarhay naft asiai rahi baray dorzadan tahrimhay Iran peidamikonand” [Asia Oil Markets Find Ways to Bypass Iran Sanctions], Abrar-e Eghtesadi, May 21, 2018, p. 4; and “Froosh makhfi naft” [Secret Sale of Oil], Shargh Daily, May 25, 2019, p. 1.
- 8.
“Chiniha naft Iran ra be mogholistan sader mikonand” [Chinese to Export Iran Oil to Mongolia], Mehr News Agency, December 25, 2015.
- 9.
Miyagawa, p. 168.
- 10.
“Vazir naft kore shomali be Tehran amad: Mozakerat nafti Tehran–Pyongyang” [North Korean Oil Minister Arrived in Tehran: Oil Negotiations of Tehran–Pyongyang], Mehr News Agency, April 18, 2013.
- 11.
Stephen G. Carter, “Iran, Natural Gas and Asia’s Energy Needs: A Spoiler for Sanctions?” Middle East Policy, Vol. 21, No. 1 (spring 2014), pp. 41–61.
- 12.
“Iran Threatens Gulf Oil Exports as Sanctions Row Escalates,” Oil and Energy Trends, February 2012.
- 13.
“Tokyo Gets Tehran’s Blessing toward Restoring Oil Imports to Pre-sanctions Levels,” Kyodo, August 10, 2015; “Iran’s Asia Crude Exports Set to Rise,” Iran Daily, October 29, 2016, p. 1; and “South Korea’s Oil Imports from Iran Up Over 100%,” Iran Daily, November 7, 2016, p. 1.
- 14.
“‘Hanguk, ilan chejae yewaeguk yeonjang eoryeobda’ taedo bakkun mi…cheongbu, wonyu suib bisang” [Change in U.S. Attitude ‘Made it Difficult to Extend to Korea, Iran Sanctions Exception’… The Government, Crude Oil Imports in Hot Situation], Chosun Ilbo, March 3, 2019.
- 15.
“General doolat: Europa baray kharid naft javab telephone mara ham nemidahad! [Government General: Europe Does not even Take Our Call for Oil Purchase!], Javan, February 6, 2019, p. 1.
- 16.
Hufbauer, et al., p. 21.
- 17.
Simons, p. xvii.
- 18.
Masanari Koike, “Japan Looks for Oil in the Wrong Places,” Far Eastern Economic Review, Vol. 169, No. 8 (October 2006), pp. 44–47.
- 19.
Yutaka Kawashima, Japanese Foreign Policy at the Crossroads: Challenges and Options for the Twenty-First Century (Washington, D.C.: Brookings Institution Press, 2003), pp. 20–21.
- 20.
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- 21.
Manochehr Dorraj and James English, “The Dragon Nests: China’s Energy Engagement of the Middle East,” China Report, Vol. 49, No. 1 (2013), pp. 43–67.
- 22.
“Iran Oil ‘Leverage’ in China’s Trade Talks with US,” Global Times, May 16, 2019; and “The Iran–China Axis,” The Wall Street Journal, July 17, 2020.
- 23.
“China Mulls Iran Sanctions,” Global Times, October 20, 2009.
- 24.
Lanteigne, p. 218.
- 25.
“Asia is Purchasing Nearly All of Iran’s Oil,” The Diplomat, January 5, 2013; and “Ni Iran kaidan Chūtō antei e no ichijo to shitai” [Japan–Iran Talks: Aiming to Stabilize the Middle East], Yomiuri Shimbun, December 22, 2019.
- 26.
Juneau.
- 27.
Jeffrey J. Schott, “Economic Sanctions against Iran: Is the Third Decade a Charm?” Business Economics, Vol. 47, No. 3 (2012), pp. 190–192.
- 28.
Robert M. Gates, Duty: Memoirs of A Secretary at War (New York: Alfred A. Knopf, 2014), p. 27.
- 29.
Mary Ann Heiss, “The International Boycott of Iranian Oil and the Anti-Mosaddeq Coup of 1953,” in Malcolm Byrne and Mark J. Gasiorowski, eds., Mohammad Mosaddeq and the 1953 Coup in Iran (Syracuse, NY: Syracuse University Press, 2004), pp. 178–200; and “Japan’s Iran Moment,” The New York Times, February 17, 2010.
- 30.
Upon returning back home, however, Nissho Maru was reprimanded for its act by the Japanese government, while the British upped the ante by taking legal action in Tokyo against the Japanese owner of the oil tanker and asserting that they owned the cargo Nissho Maru had brought in from Iran. But the case was later dropped and the Japanese company emerged triumphant. The saga of Nissho Maru was turned into a bestselling novel in 2014 and a film in 2016, both of them in the Japanese language. For more details on the Japanese historical book which could sell astonishingly more than 1,700,000 copies in January 2014 alone, see: Naoki Hyakuta, Kaizoku to yobareta otoko [A Man Called Pirate] (Tokyo: Kodansha, 2014).
- 31.
“Sanctions on Iran Create Diplomatic Headache, Rather than Economic Catastrophe, for Oil-dependent Japan,” The Japan Times, June 27, 2018. Additionally, the condensate which the ROK was importing from Iran happened to be “$2 to $6 cheaper per barrel than crude oil produced in other oil-producing nations.” In January 2019, for example, data from Korea National Oil Corporation (KNOC) showed that crude imports from Qatar cost the ROK $61.75 per barrel, but the East Asian country paid only $52.86 per barrel for its crude imports from Iran. “US Embargo on Iranian Oil to Hurt SK Incheon, Hyundai Oilbank,” Korea Times, April 22, 2019; and “Iran Sanctions Alarm Korean Petrochemical Sector,” Korea Herald, April 23, 2019.
- 32.
“Chiniha az tahrim Iran sood mibarand” [Chinese Benefit from Iran Sanctions], Ghanoon Daily, July 26, 2018, p. 3.
- 33.
“Iran Oil Officials in Bei**g to Discuss Oil Supplies, Projects,” Reuters, April 7, 2015.
- 34.
“Moshtarian asiai naft Iran arzantar be dasteshan miresad” [Asian Customers Get Iran Oil Cheaper], Eghtesad-e Pooya, August 11, 2018, p. 4; and “Takhfif vizhe nafti baray chiniha” [Special Oil Discount for Chinese], Eghtesad-e Pooya, August 1, 2020, p. 1.
- 35.
“Emtiyaz nafti be chin nemidahim” [We don’t Give Oil Concession to China], Eskenas Newspaper, July 21, 2020, p. 5.
- 36.
Cole, p. 82.
- 37.
Pieper.
- 38.
Cole, p. 81.
- 39.
“Uncertain Future in HK for Iranian Ship** Line,” South China Morning Post, March 30, 2011; and “Iran’s Hong Kong Ship** Shell Game,” The Wall Street Journal, August 30, 2011.
- 40.
“China Criticizes New EU Sanctions on Iran, Calls for Talks,” Reuters, October 16, 2012.
- 41.
“Japan’s Inpex in Running for Azadegan Oil Field Deal, Iranian Official Says,” The Japan Times, January 4, 2017.
- 42.
“SMEs to Take a Hit If Iran Bans South Korean Imports,” The Hankyoreh, June 28, 2012.
- 43.
“Ship Insurance Costs Soar after Middle East Tanker Attacks,” Reuters, June 14, 2019.
- 44.
“Nakhostin kashti khareji dar Bandar Abbas pahloo gereft” [First Foreign Ship Berthed in Bandar Abbas], Mardomsalari, July 23, 2014, p. 4.
- 45.
“Geroukeshi baray feroosh naft Iran” [Blackmailing for Selling Iran Oil], Shargh Daily, August 9, 2018, p. 5; and “Persian Gulf Oil Shipments Cost More than $500,000 to Insure,” Bloomberg, June 24, 2019.
- 46.
“Burning Iranian Oil Tanker Sinks after January 6 Accident: Chinese State TV,” Reuters, January 14, 2018.
- 47.
“Rescuers Battle Toxic Oil Blaze off China Coast,” Financial Times, January 8, 2018.
- 48.
“Hope Fades for Missing Crew Members as Iranian Oil Tanker Sinks,” The New York Times, January 14, 2018.
- 49.
“Davat kore shomali az Iran baray moghabele ba America” [North Korea Invites Iran to Stand Up to America], Aftab-e Yazd, October 17, 2017, p. 15; “Nazdiki Iran va kore shomali; payami be kakhe sefid” [Rapport between Iran and North Korea; A Message to the White House], Aftab-e Yazd, April 30, 2019, pp. 1, 15; and “Snapback of U.S. Sanctions on Iran Renews Concerns over Pyongyang–Tehran Ties,” Yonhap News Agency, September 22, 2020.
- 50.
“Hamle havayi America be naftkesh irani sehhat nadard” [American Air Attack on Iranian Tanker not True], Tabnak, January 15, 2018; and “Chera parcham Panama berooy naftkesh irani nasb bood?” [Why did Iranian Tanker Have Panama Flag?], Tabnak, January 16, 2018.
- 51.
“Naghsh asiaiha dar kahesh asarbakhshi tahrim nafti” [Role of Asians in Cooling the Effectiveness of Oil Sanctions], Tejarat News, June 3, 2018, p. 1.
- 52.
“Iran to ‘Reconsider’ Ties If S. Korea Cuts Oil Imports,” Korea Herald, June 29, 2012.
- 53.
Iran’s gasoline problem was compounded in 2010 when the Obama administration passed the Comprehensive Iran Sanctions, Accountability and Divestment Act (CISADA) which aimed, among other things, to deter foreign oil companies from supplying gasoline to the Middle Eastern country.
- 54.
“China Supplying Gasoline to Iran: Report,” Global Times, September 24, 2009; and “China Sweats Iran Trade Ties,” Global Times, September 30, 2009.
- 55.
“Chin 8 million boshke naft Iran ra bedoon sabt dar gomrok kharid” [China Purchased 8 Million Barrels of Iran Oil without Customs Registration], Servat News, August 5, 2020, p. 5; and “China is Still Brimming with Iranian Oil,” Atlantic Council, February 10, 2021.
- 56.
“Chungguk, hwanjeog, che3gukkyeongyu tonghae ‘ilan wonyu uhoesuib’ uihog” [China Suspected of ‘Importing Bypassed Iran Crude Oil’ through Transshipment and Third Country], Hanguk Kyeongje, July 3, 2019.
- 57.
“China is Still Brimming with Iranian Oil,” Atlantic Council, February 10, 2021.
- 58.
“China Firms Dominate Iran Oil Expo,” Global Times, April 18, 2011.
- 59.
“Chin bozorgtarin moshtari petroshimi Iran shod” [China Becomes Biggest Customer of Iran Petrochemicals], Asrar Daily, June 25, 2016, p. 1; and “Ba hazf kore az list moshtarian; Chin bozorgtarin moshtari petrochimi Iran shod” [After Eliminating Korea from the List of Customers; China Becomes Largest Customer of Iran Petrochemicals], Kaenat, June 25, 2016, p. 10.
- 60.
Jones, p. 5.
- 61.
David Wood, “Iran’s Strong Case for Nuclear Power is Obscured by UN Sanctions and Geopolitics,” Atoms for Peace: An International Journal, Vol. 1, No. 4 (2007), pp. 287–300.
- 62.
“European Oil Majors March Back to Iran,” The Wall Street Journal, March 10, 1999.
- 63.
Suzanne Maloney, “Sanctioning Iran: If Only It Were So Simple,” The Washington Quarterly, Vol. 33, No. 1 (2010), pp. 131–147.
- 64.
Greg Ryan, US Foreign Policy towards China, Cuba and Iran: The Politics of Recognition (Abingdon and New York: Routledge, 2018), p. 111.
- 65.
“Korea to Reduce Oil Imports from Iran in Steps,” Korea Herald, January 17, 2012; and “Japan Slashes Iran Oil Imports Amid Sanctions,” Japan Today, May 31, 2012.
- 66.
“Sanctions Exemption Shows China’s Power,” Global Times, June 30, 2012.
- 67.
“Korea Faces 18% Iranian Oil Cut Guideline: Sources,” Korea Times, February 3, 2012.
- 68.
“U.S. oil Sanctions Waiver Extended,” Kyodo, September 7, 2013.
- 69.
“Cheshm omid be shargh” [Pinning Hope on the East], Vatan Emrooz, June 12, 2018, p. 2; and “Seoul Granted Waiver to Buy Iranian Oil,” Korea Herald, November 5, 2018.
- 70.
“Seoul Seeks Exemptions from Trump’s Iran Sanctions,” Korea Herald, August 16, 2018.
- 71.
“U.S. to Eliminate Iran Oil Waivers for Countries Including Japan after May 2 Expiration,” The Japan Times, April 22, 2019.
- 72.
“United States Unexpectedly Cancels Iran Sanctions Waivers; Puts Pressure on Market, Mideast Tensions.” Oil and Energy Trends, No. 44 (2019), pp. 18–19.
- 73.
“‘Hanguk, ilan chejae yewaeguk yeonjang eoryeobda’ taedo bakkun mi…cheongbu, wonyu suib bisang” [Change in U.S. Attitude ‘Made it Difficult to Extend to Korea, Iran Sanctions Exception’…The Government, Crude Oil Imports in Hot Situation] Chosun Ilbo, March 3, 2019.
- 74.
“Taiwan Hopes for Iran Oil Sanction Waiver,” Taiwan News, November 3, 2018.
- 75.
“Taiwan va Sri Lanka moshtarian jadid nafti Iran: Vorood be bazaar shargh Asia” [Taiwan and Sri Lanka New Customers of Iran Oil: Entry into East Asia’s Market], Jahan-e Sanat, May 12, 2016, p. 13.
- 76.
“Khyanat be Iran, inbar tavasot chin!” [Betraying Iran, this Time by China!], Kelid Newspaper, May 20, 2018, p. 4.
- 77.
“HK Ignores US Sanctions on Iran as Tanker Heads East,” Asia Times, May 30, 2019.
- 78.
“Hong Kong Rejects U.S. Warning on Ship Breaching Iran Sanctions,” Bloomberg, May 29, 2019.
- 79.
Before the Trump administration quit the nuclear deal and reinstated all Iran sanctions, China was importing some 600,000 bpd of crude oil from the Persian Gulf country.
- 80.
“United States Should Derail Prospects for an Iran–China Alliance,” The Heritage Foundation, October 6, 2020.
- 81.
“Hanguo tingzhi **kou yilang shiyou” [South Korea Stops Importing Iranian Oil], **nhua, September 24, 2018; and “Kore jonoobi varedat naft az Iran ra betoor kamel motavaghef kard” [South Korea Stopped Importing Iran Oil Completely], Abrar-e Eghtesadi, September 24, 2018, p. 1.
- 82.
“Iranian Vendors of S. Korean Products Shutting Down Due to Lack of Supplies,” The Hankyoreh, February 29, 2020.
- 83.
The South Korean government was probably not also happy when it had to reimburse its oil companies for “excess transportation costs” caused by the replacement of Iranian crude supplied by non-Middle Eastern countries located in Africa, Europe, and the Americas. “Ilanchejae daeeung…wonyudo ibseon dabyeonhwa butamgeum hwangeub 3nyeon yeonjang” [Response to Iran Sanctions…Diversification of Crude Oil Imports and Extension of Charges Refund by 3 Years], Hanguk Kyeongje, May 3, 2019.
- 84.
In sharp contrast to 2016, South Korea’s oil imports from the United States increased by 520 percent in 2017 and 3400 percent in 2018. For more details, see: “S. Korea’s Imports of US Crude Oil Have Risen Drastically during Trump Era,” The Hankyoreh, March 17, 2019.
- 85.
With regard to the quality of Iranian crude, a Korean newspaper once revealed that “Iranian condensate’s naphtha content surpasses approximately 70 percent, while that of other countries’ condensate remains around 50 percent. This means domestic petrochemical firms need more oil to produce the same amount of naphtha if they use ultra-light oil from other countries.” “US Embargo on Iranian Oil to Hurt SK Incheon, Hyundai Oilbank,” Korea Times, April 22, 2019.
- 86.
“Japan Reportedly to Halt Iran Oil Imports Under U.S. Pressure,” Japan Today, September 4, 2018.
- 87.
“Zhapon hargez Iran ra tark nakardeh ast” [Japan Has Never Left Iran], Hamshahri, February 19, 2019, pp. 1, 24.
- 88.
“Tai Iran Nihon, yureru dokuji gaikō” [Japan against Iran, Shaking Independent Diplomacy], Nihon Keizai Shimbun, July 12, 2018.
- 89.
“Ba dastoor dolat: Faghat az keshvarhai ken aft Iran ra bekharand kala vared mikonim” [Government Instructed: We Import Goods only from Countries Which Buy Iran Oil], Abrar-e Eghtesadi, July 5, 2018, p. 4.
- 90.
“Namaknashnasi koreiha” [Ungratefulness of Koreans], Khorasan News, September 16, 2018, p. 4.
- 91.
Iran’s oil incomes had soared from around $1.1 billion in 1970 to more than $20 billion by 1976 or a few years before the Islamic Republic replaced the Pahlavi monarchy.
- 92.
Jahangir Amuzegar, “Iran’s Oil as a Blessing and a Curse,” Brown Journal of World Affairs, Vol. 15, No. 1 (fall/winter 2008), pp. 47–61.
- 93.
“Saderat gaz Iran tahrimshodani nist” [Exports of Iran Gas not Sanctionable], Eghtesad-e Meli, May 28, 2018, p. 5.
- 94.
“Oil Prices Fall as U.S. May Grant Some Waivers on Iran Crude Sanctions,” Reuters, October 8, 2018.
- 95.
“US Sanctions on Iran, Trade War with China and Trade Peace with Mexico,” Oil and Energy Trends, No. 43 (2018), p. 7.
- 96.
Additionally, the mysterious global crisis of coronavirus, also known as COVID-19, from the early 2020 onward had a role to play in lowering demands for crude oil in many energy-dependent countries some of which used to be regular consumers of Iranian oil for decades.
- 97.
“Velayati dar Moscow: Agar Iran natavanad naft sader konad hichkas dar mantaghe nemitavanad” [Velayati in Moscow: If Iran not Allowed to Export Oil No Other Country in the Region Will], Kayhan, July 14, 2018, pp. 1, 10.
- 98.
“Farmandeh sepah: Har lahze erade konim, sodoor naft donya rag hate mikonim” [Commander of IRGC: Any Moment We Wish, We Can Cut the World’s Supply of Oil,], Abrar News, July 26, 2018, p. 2.
- 99.
J. Peter Pham, “Iran’s Threat to the Strait of Hormuz: A Realist Assessment,” American Foreign Policy Interests: The Journal of the National Committee on American Foreign Policy, Vol. 32, No. 2 (2010), pp. 64–74.
- 100.
“Ejaze feroosh yek ghatre naft ra be ma nemidahand” [They Do not Let Us to Sell One Drop of Oil], Akhbar-e Sanat, September 5, 2020, p. 2.
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Azad, S. (2022). Targeting the Lifeline: Oil and Energy Security in Trouble. In: East Asia and Iran Sanctions. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-97427-5_3
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