The BRICS group of emerging world powerhouses -Brazil, Russia, India, China and South Africa -are meeting in New Delhi amid Western pressure to cut crude imports as part of sanctions designed to halt Tehran's suspected pursuit of nuclear weapons.
China and India are the biggest buyers of Iran's crude, which they need to help sustain economic growth in two of the world's fastest-growing major economies. Trade ministers of both nations on Wednesday said they would maintain economic ties with Tehran, despite pressure from Washington.
China disapproves of tougher Western sanctions on Tehran but its refiners have cut purchases of Iranian crude, albeit because of a pricing dispute. India too, publicly, has said it will not abide by unilateral measures while privately telling oil companies to cut purchases by at least 15 per cent -- which they have done.
For its part, South Africa has cut its dependence on buying oil from Iran, the world's fifth-biggest oil exporter, and is "proactively" trying to diversify its purchases, Rob Davies told Reuters on the sidelines of the BRICS summit.
"I think that we all broadly agree with the proposal, the terminology that was made, that if there are U.N. Security Council sanctions then we are all bound by that, but if there are sanctions that are imposed by other countries unilaterally, they shouldn't have to apply to us," Mr Davies said, after a meeting of BRICS trade ministers.
"But I think the problem is that we've also got the power relations to contend with, and that whether we like it or not the decision will impact on us in the form of higher oil prices and possibly even shortages of supply. So those are all going to be big challenges that we're going to face," he added.
CANNOT CUT TIES
China and India have so far publicly resisted U.S. calls to cut imports of Iranian oil. The U.S. has exempted Japan and 10 EU nations from financial sanctions because they have slashed purchases, but China and India remain at risk of such steps.
At this week's BRICS summit, during which countries are expected to launch plans for a joint development bank, Indian Trade Minister Anand Sharma said his country could not "just rupture" ties with Iran. His Chinese counterpart, Chen Deming, said China was "not obliged to follow any domestic laws and rules of any particular countries."
"If the oil price continues to rise it will definitely not be good news for BRICS countries as well as countries in the rest of the world," he told reporters at the summit, adding that high oil prices were hurting the global economic recovery.
South Africa imported no oil from Iran in January, according to government trade and customs data, suggesting Africa's biggest economy has heeded U.S. calls.
Trade figures showed marked increases in January imports from Qatar, Bahrain, Saudi Arabia and Kuwait, indicating they have replaced Iran, usually South Africa's biggest supplier of crude accounting for a quarter of its oil imports.
South Africa's deputy foreign minister, Ebrahim Ebrahim, told a news conference that almost all Iranian oil imports had been suspended, although officials later retracted his comments.
The country's energy minister said last week it would take until May to come up with a plan to replace Iranian supplies.
"We're having to make steps of that sort, because I think we realise the power relations," Davies told Reuters, when asked whether South Africa had cut its dependence on Iranian oil.
"It's not what we think ought to happen but the power relations and the decisions that oil companies may take are going to force us to diversify," he added. "So I think that's something which we're doing proactively."
Copyright@ Thomson Reuters 2012
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