India Forced To Cancel Iranian Oil Shipment On Pressure From EU

Based on recent stories coming out of India, I would not have expected this. This is huge. The ante has just been raised.

An oil tanker from India has been forced to cancel a planned shipment from the Iran in an early sign of the potential impact of the new sanctions on the Middle Eastern nation, according to Reuters.

The U.S. and Europe have both announced new sanctions against Iran for its continued pursuit of a nuclear program many in the West believe could be put toward developing weapons.

The E.U. intends to cut off all imports from Iran in the coming months, but it also announced new restrictions preventing insurers from covering any contracts made with Iran after a January 23 deadline. 

These are the data points I derive from this newest wrinkle:

• insurance is a bigger issue than the diplomatic drop-dead date
• the diplomatic date for oil sanctions was July 1, 2012 
• India now has to find another source of oil to replace Iranian oil
• Iran now has a tanker full of oil with no place to go (China?)
• if Iran can find a buyer for this oil, the buyer (China?)should get it at "fire-sale" prices 
• Iran, already hurting from sanctions and economy in general, cannot afford loss of oil income
• Iran has two choices: blink or "damn the torpedoes, full speed ahead"
• North Korea provides a good model for Iran if it chooses the first choice (to blink)
• I am waiting for that 3:00 a.m. phone call (probably automatically forwarded to SecState Hillary) if Iran chooses the second alternative
• my hunch is we won't have to wait until July 1, 2012, to see the chain of events play out.

I'm probably reading too much into this story. I see the market is "correcting" as they say based on worries about Greece (will that story every end?). And oil is following the market down, worried more about the global economy than the Mideast. Hmmm. The week is not yet over.