Iran’s Oil Exports Rise Month-to-Month Ahead of Sanctions Deadline
October’s higher export volumes may reflect long-standing customers buying more oil ahead of planned reductions in November, when sanctions are expected to prevent many refiners from taking Iranian crude.
But the exports are nonetheless significantly higher than what many market analysts had projected and so far constitute just a 10 percent reduction average export volumes prior to President Trump’s withdrawal from the nuclear deal in May. Reports had suggested exports would fall to just over 1 million bpd in October.
Add to this the news that refiners like Turkey’s Turpas and India’s MRPL may receive sanctions waivers that will allow them to sustain purchases of Iranian crude and it looks increasingly possible that Iran will be able to sustain export volumes well-above 1 million barrels per day following the reimposition of sanctions on November 5.
When broad sanctions were last introduced on Iran’s oil sector in 2012, exports fell from 2.6 million bpd to just 1.4 million bpd in 2014 as countries tapered their imports of Iranian crude.
Should Iran manage to sustain export volumes around 2014 levels, it would be a significant achievement both because of the Trump administration’s effort to drive Iran’s exports to “zero” and also because of the important factor of oil prices. Back in 2014, oil prices fell 40 percent between June and December, settling to below USD 40 per barrel in 2015.
With today’s oil price double that figure, Iran is approaching November with a more bullish outlook than many had predicted. Iranian oil minister Bijan Zanganeh recently stated that the United States “has done most of the things it could do, and there is not much left to do against Iran,” with the aim of restricting exports.
On the other hand, as David Sheppard of the Financial Times writes, “While there may be more crude than first anticipated in the market for now, should the US ultimately succeed in hammering Iran’s exports lower the market could be in for a sharp shock after November 4.”
It looks like we are heading for a photo finish.
Photo Credit: IRNA