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Iran oil exports to plummet in November, but rebound on way as buyers use waivers

Reuters  |  SINGAPORE 

By Henning Gloystein

SINGAPORE (Reuters) - Iran's exports have fallen sharply since U.S. said at mid-year he would re-impose sanctions on Tehran, but with waivers in hand, the Middle Eastern nation's major buyers could scale up orders as soon as next month.

The original aim of the sanctions was to cut Iran's exports as much as possible, to quash its nuclear and ballistic missile programmes, and curb its support for militant proxies, particularly in Syria, and

But the exemptions granted to Iran's biggest clients - China, India, South Korea, Japan, Italy, Greece, and - which allow them to import at least some oil for another 180 days, could mean the exports start to rise after November. This buyers takes as much as three-quarters of Iran's seaborne oil exports, trade data shows.

"The decision by the U.S. (to grant waivers) represents a departure, for now, from the stated aim of reducing Iran's to zero," said Pat Thaker, regional and at The

As a result of pre-sanctions pressure by Washington, Iran's oil exports in November may not exceed 1 million to 1.5 million barrels per day (bpd), according to industry estimates, making them as little as a third of a mid-2018 peak.

"U.S. sanctions are expected to bring Iranian crude exports down to 1.1 million bpd in November," according to S&P Global Platts Analytics.

Japan's trade minister, Hiroshige Seko, though, has already said on Tuesday that Japanese buyers of Iranian oil are expected to resume imports from the Islamic republic after the country was granted a waiver from U.S. sanctions.

and South Korea, both close U.S. allies, had toed the sanctions line and stopped buying crude from

India, Iran's second-biggest oil customer, also cut orders ahead of the sanctions, hoping its effort to reduce reliance on would pay off in and win it a waiver once the sanctions re-started.

Even China, locked in a bitter trade war with the United States, bowed to pressure from and dialled back imports.

TAKING THE STING OUT OF SANCTIONS

Trading sources said several Asian are already looking to increase their orders for Iranian oil soon.

"Enquiries for cargoes from are ... coming in from several Asian buyers," said one merchant trader, who declined to be named because he was not authorized to talk about his firm's commercial activity.

The wide-ranging exemptions have cut fears of a supply shortage, taking pressure off companies, governments and economies around the world that have struggled with the surging cost for fuel.

U.S. Trump, facing crucial midterm elections that may cost Republicans control of the U.S. Congress, said on Monday he wants to impose sanctions on Iran's oil gradually, citing concerns about shocking markets and causing global price spikes.

That has helped to take the sting out of the sanctions threat, which helped to lift international benchmark Brent crude futures to four-year highs of almost $87 a barrel in early October.

Brent prices are now about 15 percent lower than that peak and have barely budged over the last two sessions. [O/R]

Now it will be key to watch "what happens after the exemptions expire in 180 days," the said.

Iran's oil exports rose sharply after the previous round of sanctions were lifted in early 2016. Including condensate, an ultra-light form of crude, shipments peaked around 3 million bpd in mid-2018, according to trade data in Eikon.

(Reporting by Henning Gloystein; Editing by Tom Hogue)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, November 06 2018. 11:55 IST
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