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Iran’s Disruptions Of Oil Shipments Irritating India & China, The Few Remaining Allies Of Tehran

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Iran’s disruptions of Persian Gulf oil shipments is putting Tehran in a difficult situation. The few remaining allies of Iran i.e. India and China are perturbed by country’s actions as Tehran somehow manages to irritate their key allies while targeting their foes. EurAsian Times gets you a report from The Wall Street Journal.

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Tehran captured two U.K.-connected vessels in the Persian Gulf on July 19, two weeks after Britain seized an Iranian oil tanker near Gibraltar it accused of exporting oil to Syria in breach of European Union sanctions. Iran, which had threatened to respond to its vessel’s seizure, also detained an Emirati-based ship it accused of smuggling.

The seizures were in keeping with Iran’s vow to disrupt maritime traffic in the Strait of Hormuz as a retaliatory show of force to the U.S., after it banned Iranian oil exports, the lifeblood of its economy. The U.K., though it is working with other European countries to salvage the international nuclear deal with Iran, was singled out by Tehran as a target after the Gibraltar incident and now faces the same threat as adversaries like the U.S., Saudi Arabia and the United Arab Emirates.

But Iran’s strategy has also vexed the country’s remaining trade partners, including India, China and Iraq. Dozens of crew members aboard the seized ships have been Indian and one of the ships temporarily seized was chartered by China. On Sunday, Iran said it had seized an Iraqi vessel it accused of smuggling, at a time when Baghdad is becoming a key trade partner of Tehran’s and one of its backchannels with the West.

“It’s like mutual-assured destruction. Everything is potential collateral damage,” said Helima Croft, chief commodities strategist at Canadian broker RBC. “You think you get a British tanker and you get an Indian crew.”

When Iran’s Islamic Revolutionary Guard Corps boarded the Liberian-flagged Mesdar on July 19 as it headed to Saudi Arabia to load crude, Iranian state media identified the vessel as British because it is managed by Glasgow-based operator Norbulk Shipping U.K.

But as Iranian forces began forcing the vessel into its waters, Iran received urgent calls from the vessel’s real owner: Algeria, whose state-run oil company Sonatrach is the Mesdar’s ultimate beneficiary. A small crisis team led by the Algerian ministries of foreign affairs and energy obtained the ship’s release within just over an hour, Sonatrach said in a subsequent statement.

Vital CustomersAs U.S. sanctions cut into Iran’s exports, China and Indiahave become increasingly important trade partners. Quarterly value of Iran’s merchandise exports, bydestinationSource: IMF

Algeria maintains cordial relations with Iran—a rarity among Arab nations—and has frequently opposed unilateral sanctions against the Islamic Republic. Even more awkward for Iran was that the tanker had been contracted to carry oil for Unipec, the trading arm of Chinese government-run energy company China Petroleum & Chemical Corp. , also known as Sinopec, Sonatrach said.

Sinopec didn’t respond to a request for comment.

The Chinese company remains an investor in Iran’s mammoth Yadavaran oil field. And China remains Tehran’s last main crude buyer, now that U.S. sanctions on Iranian oil exports have scared off its biggest customers in Europe and India. China imported 208,205 barrels a day of Iranian oil in June, a third of its level a year ago, according to Chinese customs data.

“China and Iran have friendly cooperation,” said a spokesperson for the Ministry of Foreign Affairs in Beijing. “The normal cooperation between China and Iran, including in the field of energy, is just, legitimate and legal. We hope such legitimate rights will be respected and protected.”

The day Iran’s Islamic Revolutionary Guard Corps forces stormed the Algerian-owned Mesdar, the Guard also seized the U.K.-flagged Stena Impero, which is owned by a Swedish company and was manned by a mostly Indian crew. The detention of both the vessel and its 18 Indian sailors has become a cause célèbre in Kerala, a southern Indian state from where four of the crew hail.

Originally Published By The Wall Street Journal

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