Japan and China able to work around sanctions on Iran and buy Iranian oil

EU sanctions on shipment of Iranian oil have not prevented China and Japan from receiving shipments. Japan says it will provide coverage for Iranian tankers as they cannot get commercial insurance. China has offered Iran its own tankers to move crude oil.

Japan has approved government insurance of up to 7.6 billion for each tanker. Next month China and Japan combined will load about 620,000 barrels a day next month..

The EU ban includes not just a ban on member countries importing Iranian oil but also EU insurance firms from covering Iran's exports. The ban comes in force July 1st.

The measure will effect not just China and Japan but also South Korea and India. Both the EU and U.S. have imposed sanctions which are supposed to force Iran to give up its nuclear program.

India won an exemption from U.S. sanctions this week. India also may give insurance guarantees to avoid the EU ban on insurance. On the other hand South Korea has failed to get an exemption from U.S. sanctions. South Korea intends to simply not import crude from Iran. For more see this article.

India's purchase of Iranian oil brings protests from the U.S.

India has managed to forge a good relationship with the West especially the U.S. Now the U.S. is putting pressure on India to stop purchasing Iranian oil. However that oil is key to India's continued economic growth.
Through support for India the U.S. is able to provide a check to Chinese influence in the Asia-Pacific area. To damage relations with India over the purchase of Iranian oil would be very short-sighted in the view of some analysts.
Sreeram Chaulia of the Jindal School of International Affairs notes:“In the last ten years, if the Unites States has achieved anything of strategic value in Asia, it is the closeness with India,” “And I don’t think it would want to jeopardize all that for the sake of punishing Iran.” Chaulia went on:“It would be strategic suicide on the part of the United States to actually go ahead and impose sanctions on Indian companies,” However perhaps many U.S. politicians will demand that Obama bring India in line and punish the country for opposing the boss.
However another analyst noted that the U.S. has already had some success in putting pressure on India. Some Indian companies have withdrawn investment from Iran and financial organisations are struggling to reroute their financial dealings due to sanctions. For more see this article.

India pressured by U.S. to stop buying Iranian oil

India purchases around 12 per cent of its oil yearly from Iran. This is worth about 12 billion dollars each year. The U.S. would like to see that amount go down to zero.

However, India is not likely to follow the U.S. advice unless it can get oil cheaper from other sources. The U.S. is apparently trying to broker deals with other outside suppliers. Sources told Bloomberg News that Saudi Arabia is willing to step up and provide oil in replacement for the Iranian oil.

Iran apparently is willing to cut the price of the oil it sells to India. This is creating a win situation for India as it can play off Iran against other suppliers.

India had actually been purchasing more oil from Iran. In January there was an increase of 40 per cent from a month earlier.

Pressure on Iran and rumours of war have the potential for a negative impact on the global economy as the price of oil rises. Goldman Sachs has predicted crude could rise to $123.50 a barrel this year. This could very well slow global economic growth. For more see this article.