Waivers likely to mitigate Iran’s plunging oil sales
Iran’s oil exports have fallen sharply since US President Donald Trump said at midyear 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 oil exports as much as possible.
However, the exemptions granted to Iran’s biggest oil clients — China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey — allow them to import at least some oil for another 180 days and could mean exports start to rise after November. This group of eight buyers imported more than 80% of Iran’s 2.6-million barrels per day (bpd) of oil exports last year, Refiniv Eikon data shows.
“The decision by the US [to grant waivers] represents a departure, for now, from the stated aim of reducing Iran’s oil exports to zero,” said Pat Thaker, regional director for the Middle East and Africa at the Economist Intelligence Unit.
Iran’s crude oil exports fell significantly from at least 2.5million bpd in April, although estimates vary. In May Trump withdrew the US from a 2015 nuclear deal with Iran and reimposed sanctions.
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 in November.
“We’ve only seen 10 tankers loading at, or signalling for, Iranian terminals in November so far, which is significantly lower than what we usually see at the beginning of the month,” said data intelligence firm Kpler.
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 is likely to be on the low side.
Iran 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 1.82million bpd by Kpler and 1.5-million bpd by another firm that monitors Iranian shipments.
Japanese trade minister Hiroshige Seko said on Tuesday that Japanese buyers of Iranian oil are expected to resume imports after receiving a waiver from US sanctions.
Japan and South Korea, close US allies, had toed the Washington sanctions line and stopped buying crude from Iran.
India, Iran’s second-biggest oil customer, also cut orders ahead of the sanctions. Even China, locked in a bitter trade war with the US, bowed to pressure from Washington and dialled back imports.
Trading sources said several Asian oil importers are looking to increase their orders 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 China has been importing from Iran since January 2016, data showed.
One of the sources said the US attached some strings to the import allowance, including counterparty disclosures and laying open settlement methods, which are being evaluated.