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One of the first winners of the latest wave of Iranian sanctions emerges: Russia
The United States began applying Monday a new string of stringent economic restrictions on Iran, including a threat of sanctions for Iranian crude buyers. This has refineries in Europe and Asia – major recent buyers of Iranian oil – in search of substitutes. Russian oil companies intervened and stole Iranian customers. Both countries produce similar crude qualities, which facilitates the transition of refiners.
But Moscow is also offering Tehran a lifeline for its failed crude oil. He says he wants to defy US sanctions and buy Iranian imports. It proposes to pay only in the form of barter, then to treat the crude for domestic use. This would free up its own oil for more lucrative crude oil export markets.
"Russia is playing on all sides," said Helima Croft, Chief Strategist for Commodities at RBC Canadian Broker.
Russia sees Iran as an essential ally in its expanded geopolitical role in Syria after the civil war. He criticized the new round of US sanctions and said he will not be bound by them. In recent months, Moscow has repeatedly stated that it would buy at least 100,000 barrels of Iranian oil a day, which would be a good oil buyer who may not find a customer otherwise. Russia offers to pay for crude with Russian machinery and food, according to the Russian Oil Ministry. It is also promising to invest in the Iranian oil sector as Western companies pull out.
Russia sees Iran as an essential ally and has criticized the new round of US sanctions. President Vladimir Putin met the Supreme Leader, Ayatollah Ali Khamenei, in September 2018.
Photo:
KHAMENEI.IR / AGENCY FRANCE-PRESS / GETTY IMAGES
The new sanctions imposed by Washington are specifically aimed at Iranian oil exports, the most important economic pillar of this country. US officials want to recover 2.2 million barrels a day of Iran's crude export capacity, threatening buyers with sanctions. Many buyers, because they use the US banking system, are vulnerable to such sanctions and are already withdrawing. Russia is less vulnerable to Washington's retaliation, since it is already under US sanctions and its economy and financial system are less tied to the United States than the countries of Western Europe.
Iranian exports had dropped 800,000 barrels a day since the US announced its new round of sanctions. Oil market observers expect a sharp decline now that sanctions are in place.
At the same time, he promises to help Iran, Russia replaces Tehran in the global oil market. It has increased production by almost half a million barrels per day compared to last year, recently reaching a 30-year production record. Russia, the world's largest oil producer, pumped 11.41 million barrels a day in October, up 4.3% from the same period last year.
Part of this new crude is captured by former Iranian customers.
This is particularly the case in Europe, where buyers have abruptly stopped the Iranian purchase as they tend to be more exposed to US commercial and financial systems.
For European refiners, Russian oil is a natural substitute for Iranian crude, as it tends to be of medium density, and relatively high sulfur levels can generally be shipped more quickly to their mills than other crude alternatives. Italian refiners
Eni
SpA and
Saras
SpA, for example, is using more Russian oil, especially its popular Urals, to replace Iranian oil, according to people familiar with the subject. Eni and Saras spokespersons did not respond to calls for comment.
L & # 39; Urals [grade] will benefit ", Patrick Pouyanne, General Manager of
Total
HER,
said at a conference on energy in London last month.
Total stopped buying Iranian crude in July, the company said. The following month, it bought 217,000 barrels of crude a day for its refinery in Le Havre, France, a record for a year, according to the data of the maritime tracker Kpler.
Russia is also replacing Iran's crude for customers outside the European Union. Turkey resumed its Russian oil imports in June after an absence of three months, offsetting the reduction in Iranian oil purchases, according to official statistics. Turkey has also vowed to challenge US sanctions, but many of its companies have deep international ties and are vulnerable to US sanctions.
This is already translating into higher profits for energy companies run by the state of Moscow. Rosneft announced Tuesday a net profit multiplied by three, to 451 billion rubles ($ 6.8 billion) for the first nine months of 2018 compared to the same period last year, mainly due to 39, an increase in production and rising prices of the Urals.
The same replacement effect occurred in China, which reduced Iranian oil imports by 34% in September compared with the previous year, while sales in Russia increased by 7%.
In South Korea, Tehran oil sales collapsed in August, falling 85 percent on an annual basis. Russian shipments increased by 20% in the same month, according to South Korean customs.
-Anatoly Kurmanayev and Ann Simmons contributed to this article.
Write to Benoit Faucon at [email protected]
