Relations between Iran and Saudi Arabia, which supposed had thawed as part of Obama's landmark 2015 nuclear deal which also allowed Iran to resume exporting its oil, are once again on the fence following a statement by Iran's Supreme Leader, Ayatollah Ali Khamenei, which accused the United States of scaring businesses away from Tehran and undermining a deal to lift international sanctions.
According to Reuters, Khamenei told hundreds of workers that a global deal, signed between Iran and world powers, had lifted financial sanctions, but U.S. obstruction was stopping Iran getting the full economic fruits of the agreement.
"On paper the United States allows foreign banks to deal with Iran, but in practice they create Iranophobia so no one does business with Iran," he said in quotes from the speech posted on his website.
Iran has repeatedly urged Washington to do more to remove obstacles to the banking sector, in the spirit of the July deal with the United States, the European Union, Russia and China to lift most sanctions on Iran in return for curbs on its nuclear programme.
The reason for Iran's anger is that despite the overarching deal, some U.S. sanctions remain, and U.S. banks remain prohibited from doing business with Iran directly or indirectly because Washington still accuses Tehran of supporting terrorism and human rights abuses.
U.S. Secretary of State John Kerry told the Iranian Foreign Minister Mohammad Javad Zarif in New York on Saturday that Washington was not trying to stop Iran dealing with banks outside the United States. "There are now opportunities for foreign banks to do business with Iran ... Unfortunately there seems to be some confusion among some foreign banks and we want to try and clarify that," Kerry said.
The biggest problem, and the cause for Iran's ire, is that as we reported last week, Iran is ready to start shipping out millions of barrels of oil, however it lacks the tankers and the agreements with shippers to transfer them from its oil terminals to any countries who may want to take advantage of its discounted prices. And one country is more at fault than any other: Saudi Arabia.
This is what we said last week:
As increasingly more of Iran's tanker fleet is currently utilized or is otherwise out of commission, Iran desperately needs foreign ships to execute its plans for a big export push to Europe and elsewhere and meet its target of reaching pre-sanctions sales levels this year. There is just one problem: nobody wants to give their spare tanker capacity to Iran.
According to Reuters ship owners, who are not short of business in a booming tanker market, are unwilling to take Iranian cargoes. One stumbling block is residual U.S. restrictions on Tehran which are still in place and prohibit any trade in dollars or the involvement of U.S. firms including banks - a major hurdle for the oil and tanker trades, which are priced in dollars.
As a result only eight foreign tankers, carrying a total of around 8 million barrels of oil, have shipped Iranian crude to European destinations since sanctions were lifted in January, according to data from the tanker-tracking source and ship brokers.
That equates to only around 10 days' worth of sales at the levels of pre-2012, when European buyers were purchasing as much as 800,000 barrels per day (bpd) from the OPEC producer. So far no Iranian tankers have made deliveries to Europe, according to data from the tanker-tracking source.
Whether it is due to politics or simple business precaautions, Paddy Rodgers, chief executive of leading international oil tanker company Euronav, said at present there was "no great urgency to do business in Iran". "There is not a premium to do business in Iran and there is plenty of other business - the markets are busy, rates are good. So there is no stress on wanting to do it," he told Reuters. "I don't really want to set up a euro bank account in Dubai in order to trade with Iran - that would crazy."
What it boils down to is that both charters and insurance providers simply do not want to transact with Iran, and are willing to leave money on the table or else risk angering either the US or Saudi Arabia:
One can almost smell Saudi intervention here, which we first described two weeks ago when we reported that not only has Saudi Arabia banned Iran from sailing in its territorial waters, but has taken proactive steps to slow Iran’s efforts at increasing oil exports, interfering with third parties and making Iran's procurement of vessels virtually impossible. As the abovementioned oil tanker association Intertanko and other industry participants said then, while no formal notice has been given by Saudi Arabia, uncertainty is making some charterers less willing to lift Iranian crude.
And the primary impetus for Iran to push for the US deal was to resume exporting its oil (it is stil several million barrels short of its full production and export potential), suddenly the Iranian regime is starting to wonder if the U.S. a little less sincere than it led on, and if the deal wasn't merely to add another feather in Obama's foreign policy cap, even as Iran remains in the same state as before, albeit with a small kicker of being allowed to sell an extra 1 or so million barrels per day to foreign customers.