China, the largest consumer of Iranian oil, cut its oil imports from Iran by half in February from December levels, according to Reuters.
Although this reduction is temporary and largely due to a contract dispute between Tehran and Beijing rather than U.S. sanctions, it’s significant that China is expected to import 10–15 percent less oil from Iran this year compared to 2011. Given that China currently accounts for roughly 20 percent of Iran’s oil exports, the economic pressure on the mullahs is likely to intensify. For various reasons, be it contract disputes, American sanctions, or prudent attempts to diversify their energy supply, Europe, China and other countries have all recently announced they are scaling back or halting the import of Iranian oil.
The Chinese turned primarily to Saudi Arabia to make up for the loss, and the Saudis were happy to oblige:
Saudi oil minister Ali al-Naimi said the kingdom had met all its customer’s requests for oil and stood ready to raise output to full capacity of 12.5 million bpd, if needed.
“My only mission is to convey to you that there is no supply shortage in the market,” Naimi told reporters on Tuesday. “We are ready and willing to put more oil on the market, but you need a buyer.”
So long as Saudi Arabia and other major oil producers are able to limit any shortfall caused by a drop-off from Iran, expect the noose to continue to tighten. And consumed by hatred and fear of the Iranians as the Saudis are, expect them to do everything possible to keep the oil pumping as a way of easing the path to war.