WASHINGTON Iran's trading partners are looking for ways to avoid being hit by U.S. sanctions on Iranian oil transactions that take effect mid-year, with Turkey looking for other suppliers, India exploring options and smaller Asian countries arguing their imports from Tehran are tiny.
Turkey, the fifth-largest buyer of Iranian oil, has committed to reduce its crude from Tehran by 10 percent and the country's only refiner, Tupras (TUPRS.IS), a unit of Koc Holding (KCHOL.IS), has pledged to cut imports by 20 percent.
"The bottom line is that there are alternative suppliers. We are not buying at a subsidized price. We are buying at an international price," Turkish Finance Minister Mehmet Simsek told reporters on the sidelines of the Group of 20 finance ministers meetings in Washington last week.
"We obviously comply with United Nations sanctions. With U.S. sanctions, of course now we are looking at basically options out there in terms of oil. It's premature but something is being worked out," he said.
India, the second largest buyer of Iranian crude, said it was exploring options. "We are having some problems on how to fund the (oil) import because we have to pay back the oil import," India's finance minister Pranab Mukherjee told Reuters on the sidelines of the G20 meetings.
"That's one of the problems but we are exploring different possibilities," he said.
The U.S. penalties are designed to crimp Tehran's oil revenues by stopping financial institutions from conducting oil transactions with Iran's central bank, which handles most of the country's oil payments. If countries do not significantly reduce their Iranian oil imports by mid-year, they could see their banks blocked from U.S. markets.
Eleven countries, including Japan, have already won a reprieve from the U.S. law after reducing Iranian oil consumption. China, the No. 1 consumer of Iranian crude, is waiting to hear from the Obama administration on whether it will be exempt.
The European Union has proposed similar penalties on the central bank of Iran and plans an embargo on Iranian oil from July as part of a Western campaign to curb Iran's nuclear ambitions.
The United States and other Western powers say Iran's nuclear program is aimed at acquiring a weapon, an allegation Tehran denies.
Fears the sanctions on the world's third-largest oil exporter will disrupt supplies have helped push crude prices over $100 a barrel.
In a communique on Friday after their talks, the G20 developed and emerging nations agreed to closely watch oil prices and carry out "additional actions."
The finance ministers did not specify what measures they would take except to say they "welcomed commitments by producing countries to ensure there was enough oil in the markets."
"Continued cooperation to ensure adequate supply will signal to global energy markets that there will be sufficient production available to meet demand," U.S. Treasury Secretary Timothy Geithner told the International Monetary Fund's governing committee on Saturday.
Saudi Arabia is pumping 10 million barrels of oil per day - close to its highest level in decades - and has said it would increase levels to help counter shortfalls created by the loss of Iranian oil. U.S. officials have said increasing production from Iraq, Angola, Libya and other countries will help keep global crude oil markets supplied.
HIGH OIL PRICES
Twelve other countries could eventually be subject to U.S. sanctions by the end of June. A number of Asian countries, including South Korea, Singapore and Taiwan, are on Washington's watch list.
While Japan has cut purchases of Iranian crude by 15 percent to 22 percent, officials from some of the countries on the list have said they are not sure how much they would have to cut to avoid sanctions. The law only says they have to cut purchases "substantially" and the U.S. State Department has not elaborated about what other countries would have to do.
Indonesia said the U.S. government has asked whether their oil importers were bringing in Iranian crude.
"We have convinced them that we do not import Iranian oil and there are no Indonesian oil importers who import oil from Iran," Indonesian Trade Minister Gita Wirjawan told Reuters.
South Korea characterized its talks with the Obama administration as "constructive," and White House officials have said the same. But the country has not said how much it is trying to cut.
Singapore and the Philippines were quick to point out that they imported very little Iranian crude or nothing at all.
"The reality is that Singapore's import of Iranian oil is minimal," said a spokesman for Singapore's embassy in Washington.
Singapore's government has informed companies in Singapore about the U.S. sanctions, the embassy said. "We expect that given the importance of the U.S. in the world economy, companies ... will take notice of this case and make their own calculations in the light of their own commercial interests," said the embassy's spokesman.
As of the end of March, the Philippines had not imported any Iranian oil, its embassy in Washington said. Last year, the Philippines imported 5.9 million barrels of Iranian crude oil, it said.
Other small countries not on the U.S. list said they backed Western efforts to crack down on Iran but were nervous about the pressure it has put on crude prices.
The "high import costs of oil is affecting substantially our economy and balance of payments," Xavier-Luc Duval, the vice-prime minister of Mauritius told reporters on the sidelines of the IMF meeting. Mauritius does not rely on Iran for oil.
"The importance for world security and world peace outweigh any temporary inconveniences that there will be," Duval said.
(Additional reporting by Yayat Supriatna in Jakarta and Walter Brandimarte in Washington; Editing by Andrea Ricci)
Our top photos from the last 24 hours.