China Not Exempted from Sanctions
The Obama Administration announced yesterday that seven more countries that import Iranian oil, including India and Turkey, would be exempt from the oil sanctions going into effect in less than a month. (NYT 6/11/12Washington Post 6/11/12) Notably absent from the list of exempt nations is China, currently the largest importer of Iranian oil. (Bloomberg 6/12/12)
Meanwhile, one of the largest Chinese importers of oil, Sinopec, has reportedly turned down an offer to purchase discounted Iranian crude and will cut imports by up to a fifth this year, signaling a willingness to cooperate with the US sanctions regime. (Reuters 6/12/12)
“Moscow is a green light”
A call Monday night between Catherine Ashton and Dr. Saeed Jahlili seems to have confirmed negotiations between the P5+1 and Iran will continue in Moscow next week. (Al Monitor 6/11/12) Iranian negotiators agreed this morning ahead of talks to “discuss a proposal to curb production of high-grade uranium”. (The Moscow Times 6/12/12) This development follows statements by Iranian negotiators on Wednesday which raised the possibility of cancelling or delaying the Moscow talks. (NYT 6/6/12)

A European diplomat told Al Monitor that the Iranians “appear prepared to engage on our proposals”. He added, “We will respond to their ideas.” (Al Monitor 6/11/12) This sense of reciprocity was mirrored in comments by an Ashton spokesperson who said, “[Ashton] conveyed the E3+3′s readiness to respond to the issues raised by the Iranians in Baghdad.” (Al Monitor 6/11/12) On Monday, EU officials commented that Tehran had agreed to “discuss a proposal to curb its output of uranium enrichment”. (Reuters 6/12/12)
Report: Iran designing nuclear submarine
Perhaps in an attempt to raise the stakes going into negotiations, Iranian news sources are reporting that the nation is interested in building a nuclear-powered submarine. (Reuters 6/12/12) According to Mark Hibbs, a nuclear proliferation expert at the Carnegie Endowment for International Peace, “Many nuclear-powered submarines use as fuel uranium enriched to levels that could also be suitable for atomic bombs.” (Reuters 6/12/12) Although a long-term prospect, Hibbs also suggested the Iranian pursuit of a nuclear-powered submarine could be used to justify enrichment of uranium to weapons grade. (Reuters 6/12/12)
Iran’s Economy
The Iranian bank, Bank Parsian, has announced today it has discontinued payment guarantees for Iranian importers who buy Indian goods, because the bank has insufficient access to rupees, which would have allowed it to avoid Western sanctions. (Reuters 6/12/12) In January, Iran and India set up a “barter-like system” whereby 45% of their $10 billion per year oil trade would be paid in rupees, so that Indian exporters of other good could be repaid. (Reuters 6/12/12) 
Changing OPEC Dynamics
Despite falling oil prices, Saudi Arabia has called for OPEC to adopt a higher output target ahead of a meeting of OPEC members. (FT 6/11/12) In recent months, Saudi Arabia has been producing above OPEC’s official production ceiling, with the goal of keeping oil prices at or below $100 per barrel, while also replacing Iranian oil exports. (FT 6/11/12) Both Iran and Iraq, however, would prefer oil prices rise and would stand to benefit from increased oil revenues.
Stuxnet and Flame Linked

Computer scientists have partially linked the software codes and characteristics of the Flame virus and Stuxnet cyber weapon, widely reported to be a US and Israeli sponsored project to disrupt Iran’s nuclear program. (Reuters 6/12/12)
Analysis: “ Iran’s Ahmadinejad limps into final year in office politically wounded but still swinging”

Iran’s president hardly seemed like a fading political force at a security summit in Beijing last week. Leaders from China and Russia carved out time to hold private talks with Mahmoud Ahmadinejad and gave him center stage to unleash his pet theories about the unraveling of Western power.
But Ahmadinejad always seems to catch a second wind on the road. It’s at home where his political wounds are most visible and his expiration date is already factored into high-stakes calculations.
The one-time favored son of Iran’s theocracy — its flame-throwing populist in a common man’s wind breaker or bureaucrat’s off-the-rack suit — is now limping into his last year in office sharply weakened and in the unexpected position as an outcast among hard-liners. (AP 6/11/12)

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