It appears that the Iran sanctions are starting to bite.
If you recall that in response to Iran's intransigence over development of nuclear power plants (aka weapons) the EU and US imposed sanctions on Iran which included banning oil imports from Iran starting July 1 and banning insurance and reinsurance on vessels carrying Iranian oil. Many oil tanker companies come from outside the EU / US however they still require insurance which comes overwhelmingly from the London market. Without insurance cover many tanker companies will not transport Iranian oil. The US further threatened to lock out the banks of any country that did not reduce its purchases of Iranian oil. Finally the SWIFT banking network - the method by which banks send transaction messages to one another - will no longer do business with many Iranian banks including the Iranian Central Bank. This move effectively locks Iranian banks out of the international financial system.
The embargo could have hit harder if Japan China and India had all decided to honor the boycott. All three countries were heavily dependent on Iranian crude oil and have decided to continue importing Iranian oil to some degree. Japan cut imports of Iranian oil by 17.6% Dec-July but rather that fully cut off Iranian oil imports due to the insurance embargo the Japanese government decided to provide insurance to vessels transporting Iranian oil to Japan. China is forcing Iran to deliver oil on Iranian state vessels (which obviously cannot buy insurance). India may try the same method as China but it appears that they are simultaneously looking to source more non-Iranian oil. India did cut oil imports from Iran somewhat mostly due to banking issues. The US granted temporary sanction exemptions for Japan, China, and India on the basis of reduced purchases.
Despite the embargo-breakers it does appear from this article that Iran is hurting. The story of the 7MM bbls of Iranian crude oil stuck in Egypt with no buyers is telling. It remains to be seen if the pressure induces Iran to give up their nuclear power plant (aka weapons) development. And for those who buy into the story that Iran is developing nuclear power for civilian power purposes I submit the following
List of countries by Natural Gas Proven Reserves
List of countries by Natural Gas Production
Iran has five times the proven natural gas reserves as the US but is producing just 23% as much. Iran has 61% percent the natural gas reserves as Russia but is producing only approximately 21% as much. Iran has plenty of conventional energy resources - if they should choose develop them.
| Country/Region | Natural gas | proven reserves rank | Natural gas | production rank |
| proven reserves | Annual Production | |||
| (m³) - 2010 est | (m³) - 2010 est | |||
| Russia | 55,000,000,000,000 | 1 | 647,000,000 | 1 |
| Iran | 33,500,000,000,000 | 2 | 138,500,000 | 4 |
| Turkmenistan | 26,200,000,000,000 | 3 | 38,100,000 | 22 |
| Qatar | 25,470,000,000,000 | 4 | 116,700,000 | 5 |
| United States | 7,716,000,000,000 | 5 | 619,000,000 | 2 |
| Saudi Arabia | 7,461,000,000,000 | 6 | 83,940,000 | 10 |
| Azerbaijan | 6,071,000,000,000 | 7 | 16,520,000 | 30 |
| Venezuela | 5,524,500,000,000 | 8 | 22,900,000 | 27 |
| Nigeria | 5,246,000,000,000 | 9 | 23,210,000 | 26 |
| Algeria | 4,502,000,000,000 | 10 | 85,140,000 | 9 |
Iran has threatened to block to Straits of Hormuz in order to break the embargo. However that threat does not appear credible considering. (1) If Iran were to block the Straits they would shut off nearly all of their own exports as well. (2) the US 5th fleet is sitting right there (3) there are other ways for countries to get crude out of the Gulf. Furthermore the country who would likely be hurt the worst by loss of access to Middle Eastern oil would be one of Iran's few remaining large customers - Japan. Japan is the worlds third largest oil importer and of its oil imports 86% come from the Middle East. But you never know...
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