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SINGAPORE (Reuters) – Iran's oil exports have fallen sharply since US President Donald Trump announced that he would reimpose sanctions in Tehran in the middle of the year, but major buyers of the Islamic republic are considering already to increase their orders.
PHOTO FILE: A gas flare on an oil production platform in the Soroush oilfield near an Iranian flag in the Persian Gulf, Iran, July 25, 2005. REUTERS / Raheb Homavandi / File Photo
The initial objective of the sanctions was to reduce Iran's oil exports as much as possible, to cancel its nuclear and ballistic missile programs and to limit its support to militant proxies, particularly in Syria, Yemen and Lebanon. .
However, exemptions granted to Iran's largest oil customers – China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey – allowing them to import at least some oil for another 180 days could result in a increase in exports after November. Trade data show that this group of eight buyers absorbs up to three quarters of Iran's oil exports by sea.
"The US decision (to grant waivers) represents a departure, for now, from the stated goal of zeroing Iranian oil exports," said Pat Thaker, regional director for the Middle East and Africa at the Economist Intelligence Unit.
Due to pressure from Washington prior to the imposition of sanctions, Iranian oil exports could not exceed 1 million to 1.5 million barrels per day (bpd), according to industry estimates. represents one-third of the peak reached in mid-2018.
"US sanctions should bring Iran's crude oil exports to 1.1 million bpd in November," said S & P Global Platts Analytics.
Japanese Trade Minister Hiroshige Seko, however, has already said Tuesday that Japanese buyers of Iranian oil should resume imports from the Islamic Republic after the country was granted a waiver of US sanctions.
Platts also announced Tuesday that South Korea would be able to take about 4 million barrels of Iranian crude a month (130,000 barrels a day) under a US sanctions waiver.
Japan and South Korea, both close allies of the United States, respected the sanctions imposed by Washington and stopped buying crude oil from Iran.
India, Iran's second-largest oil consumer, has also reduced its orders before the sanctions, hoping its efforts to reduce its dependence on Tehran would bear fruit in Washington and that it would get a waiver once the sanctions restored.
Even China, struggling with a fierce trade war with the United States, has bent to Washington's pressure and cut back on imports.
OUT OF THE SITTING
According to commercial sources, several Asian oil importers are already considering increasing their orders for Iranian oil soon.
Two Chinese sources familiar with the case said the country would be allowed to buy 360,000 b / d of Iranian crude during the exemption period.
That would be about half of the daily average that China imports from Iran since January 2016, according to trade data.
One source stated that the United States had attached import-limit restrictions, including counterparty declarations and open settlement methods, which were being evaluated before placing new orders for the import franchise. 'Iran.
Both sources were not allowed to speak to the press about sanctions imposed by Iran and refused to give their names.
A trader, who also refused to give his name, said that "inquiries regarding cargoes from Iran … come from several Asian buyers".
The numerous exemptions have eased fears of a shortage of supplies, relieving businesses, governments and economies around the world from rising fuel costs.
US President Trump, faced with crucial mid-term elections that may cost Republicans control of the US Congress, said Monday that he wants to impose sanctions on Iran's oil, citing concerns over market tensions. and soaring world prices.
This helped to mitigate the risk of sanctions, raising the Brent crude international benchmark, LCoC1, to a four-year high, nearing $ 87 per barrel in early October.
Brent prices are now about 15% below this peak and have barely moved in the last two sessions.
Now, it will be essential to watch "what will happen after 180 days, after expiry of the exemptions," said the trader.
Iranian oil exports rose sharply after the lifting of the previous round of sanctions in early 2016. Shipments, including condensate, an ultra-light oil, hit a record high of about 3 million barrels per day in mid-2018, according to commercial data from Refinitiv Eikon.
Report by Henning Gloystein; Edited by Tom Hogue
