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Iran oil exports to plummet in November, then rebound as buyers use waivers

Reuters  |  SINGAPORE/LONDON 

By and Alex Lawler

SINGAPORE/LONDON (Reuters) - Iran's exports have fallen sharply since U.S. said at mid-year he would reimpose sanctions on Tehran, but with waivers in hand the Islamic Republic's major buyers are already planning to scale up orders again.

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 - allow them to import at least some oil for another 180 days and could mean exports start to rise after November.

This buyers imported over 80 percent of Iran's roughly 2.6 million barrels per day (bpd) of last year, Refiniv Eikon data shows.

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

Iran's crude exports have fallen significantly from at least 2.5 million bpd in April, before the from a 2015 nuclear deal with and reimposed sanctions, although estimates vary.

As a result of pre-sanctions pressure by Washington, Iran's oil exports in November may not exceed 1 million to 1.5 million bpd, according to industry estimates. Companies that monitor Iran's shipments are already seeing a drop in tanker activity this month.

"We've only seen 10 tankers loading at, or signaling for Iranian terminals in November so far, which is significantly lower than what we usually see at the beginning of the month," said Kpler, a data intelligence company.

According to Refinitiv Eikon data, Iranian crude exports have fallen to 1 million bpd so far in November.

An industry source who also monitors such shipments said the figure was likely to be on the low side.

expects to maintain crude exports of at least 1.1 million bpd after the reimposition of sanctions, a source familiar with Iranian thinking said, as the global market is too tight to allow a full stoppage.

In October, Iran's crude exports were estimated at 1.82 million bpd by and 1.5 million bpd by another firm that monitors Iranian shipments.

TO RESUME

Japan's trade minister, Hiroshige Seko, said on Tuesday that Japanese buyers of Iranian oil were expected to resume imports from the Islamic Republic after the country received a waiver from U.S. sanctions.

S&P Global Platts reported on Tuesday that would be able to take around 4 million barrels a month (130,000 bpd) of Iranian crude and condensate under a U.S. sanctions waiver.

and South Korea, 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 restarted.

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 were looking to increase their orders for Iranian oil soon.

Two Chinese sources familiar with the matter said the country would be allowed to buy 360,000 bpd of Iranian crude during the exemption period.

That would be about half the daily average has been importing from Iran since January 2016, trade data showed.

One of the sources said the had attached some strings to the import allowance, including counterparty disclosures and laying open settlement methods, which were being evaluated before placing new orders with Iran.

Both sources were not permitted to talk to the media about Iran sanctions and declined to be identified.

A merchant trader, who also declined to be named, said "enquiries for cargoes from Iran are ... coming in from several Asian buyers".

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

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 Refinitiv Eikon.

(Additional reporting by in London; Editing by and Dale Hudson)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Tue, November 06 2018. 17:35 IST
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