RIYADH: Are sanctions, just round the corner, really biting Iran?

Contradictory reports and statements are pouring in. Washington continues to stress that the sanctions were being complied with - largely.

On the other hand, the stance emanating from Tehran portrays, ‘business as usual.’

And to decipher truth from political conjecturing and positioning is difficult – if not impossible - lying somewhere in between.

Despite hesitation and resistance to sanctions by China, the top buyer of Iranian crude, yet at a point in time in recent months, China appeared complying with the request - somewhat.

However, this slowdown in purchases from Tehran was more tactical in nature. Beijing was squeezing Tehran for a better.

And with the deal struck, China’s purchases from Iran are in rise. Its oil imports from Iran rebounded sharply in May to nearly match 2011 levels following a steep drop-off earlier this year.

China's General Administration of Customs said crude imports from Iran was 524,000 barrels a day in May - a 35 per cent jump from the previous month.

Chinese imports from Iran were down nearly 25 per cent in the January to May, following commercial disputes between China International United Petroleum and Chemical Co., known as Unipec, and National Iranian Oil Co.

The deadlock was resolved in mid-February, and purchases began recovering in April.

And Beijing is now asserting itself politically on the issue too. China is always against one country imposing unilateral sanctions on a certain country, and “it is even less acceptable for such unilateral sanctions to be imposed on a third country,” Hong Lie, the China's Foreign Ministry spokesman underlined last Thursday.

“China's imports do not undermine the interests of a third party, nor do they go against any relevant UN Security Council resolutions,” he stressed.

Hong then went on to assert: “China's importing of Iranian oil is based on its own economic development needs. This is fully reasonable and legitimate."

India, the second largest buyer of Iranian crude, is also now taking steps to ensure crude from Tehran. Although it is indeed projected to drop by at least 11 per cent this fiscal from 2011-12 figures, yet it would still be procuring a significant 310,000 bpd from Iran.

Faced with restrictions against payments, since December 2010, Indian refiners have been using Turkey's Halkbank to pay their annual oil import bill of more than $10 billion. However, this channel was also increasingly under American sight.

Finally in January, Tehran and New Delhi agreed to settle 45 per cent of the oil trade in rupees to ensure payments. Indian government last week also announced lifting a hefty tax on the rupee payments, a move refiners had been waiting before initiating payments in rupees.

India's Bharat Petroleum Corp (BPCL) was the first Indian refiner to use the rupee payment channel, skirting tightening Western sanctions on Iran's trade.

Other Indian refiners are also expected to begin using the new payment facility in a week or two.

Japan, the third largest buyer of Iranian crude in recent years, has also been taking steps. Japan's parliament has just approved government guarantees on insurance for crude oil cargoes from Iran, paving the way for it to get round new European Union sanctions.The move allows the Japanese government, which has succeeded in getting a waiver from US financial sanctions, to provide cover of up to $7.6 billion to tankers carrying Iranian crude to Japan.

And in the meantime, Japanese trading house, Mitsubishi Corp, has also renewed its annual oil purchase deal with Iran.

Besides, another trading house, Toyota Tsusho has been also lifting Iranian crude since April. Japan has approved loadings of 120,000 bpd for both June and July. This was unchanged from May though down significantly from a year earlier.

There is a definite pressure on Tehran. Squeeze is definitely there – one can’t deny. Volumes are less. Yet the squeeze is not to be fatal – as Washington may have wanted. Iran would survive – one could hence say without fear or favour.