Reuters reported that Malaysia has halted palm oil exports to Iran because of payments problems and Asian oil buyers have cut crude purchases as Western sanctions tighten a financial noose around Iran.
Traders in China said that they would cut iron ore purchases from Iran which are worth over USD 2 billion a year because of sanctions that have forced payment defaults on Indian rice imports and prompted Ukrainian and European sellers to stop booking shipments of Ukrainian grain to the Middle East country.
The problems are the most visible evidence to date that Western sanctions are squeezing Iran's trade. Iran's crude oil buyers including China and Japan are cutting purchases, reducing the OPEC producer's earnings from its major source of the foreign exchange it needs to pay for critical imports such as food staples.
The problems have come to light after US sanctions this year targeted Iran's central bank and the European Union decided to ban Iran crude imports in an effort to force Tehran to abandon a suspected nuclear weapons program.
Iran's rial has plunged as the West increased sanctions raising the price of imports for the economy and making it difficult to find Dubai based middlemen who can process payments to keep the country's trade flowing.
Bread and rice dominate the diet of most Iranians, many of whom can no longer afford to buy meat, now selling for about USD 30 per kilogram in Tehran. Bread prices have tripled since December while rice costs about USD 5 per kilogram. Iranians earn about USD 350 per month on average while officials put the poverty line at USD 800.
Grain ships are docked outside Iranian ports, many traders have said they are not booking fresh cargoes and exports of staples to Iran such as maize are falling as collecting payment from buyers gets harder.
Data from the US Department of Agriculture showed that Iran imported 62 percent of its maize, 45% of its rice and 59% of its sugar in 2010 tonne 2011 but only 3 percent of its wheat.
In the latest sign of Iran's stress, trading sources in Malaysia said that exporters of palm oil, used in cooking oil, confectionary and bio diesel, had stopped supplying most of the 30,000 tonnes of the commodity Iran used to buy each month from the end of 2011.
(Sourced from Reuters)
