TOKYO/SINGAPORE: Iran’s crude oil exports in March may plunge by a quarter from a month earlier to the lowest since tight Western sanctions came into effect in 2012, industry sources said, squeezing income for Tehran as sanctions cast doubt over its future revenues.
The fall may result in a revenue loss of about $1bn for Iran, according to Reuters calculations based on current oil prices, just as the country’s parliament debates President Mahmoud Ahmadinejad’s spending proposals.
Tight Western sanctions imposed over Tehran’s disputed nuclear programme have cut oil exports by more than half over the past year, resulting in a plunge in the rial currency. The country passed a three-month stop-gap budget at the weekend.
Iran’s customers will load 810,000 barrels per day (b/d) of crude in March compared with about 1.1 million b/d in February, according to an industry source with direct knowledge of the matter and a company that tracks the country’s crude shipments.
Excluding Turkey, the only European buyer of Iranian crude, Tehran’s top customers in Asia — China, India, South Korea and Japan — will load 703,000b/d in March versus about 960,000b/d a month earlier. The numbers are based on loading plans and the amount ultimately imported may vary.
The drop may be partly due to Indian refiners struggling to find insurance cover to process Iranian crude because of sanctions, as well as the seasonal shutdown of refining capacity elsewhere in Asia.
Europe and the US last year introduced tough sanctions aimed at Iran’s oil trade to force Tehran to the negotiating table over its nuclear programme.
Western powers suspect Iran is trying to develop the capability to build nuclear weapons under the cover of a declared civilian atomic energy programme. Iran says its uranium enrichment work is for peaceful energy only.
Oil consumption in March typically slows as northern hemisphere winter ebbs, reducing demand for heating fuel. With summer demand to run air conditioners still a few weeks away, refiners use the window to carry out annual maintenance.
Buyers of Iranian oil may have used the seasonally low-demand month to make steep cuts in purchases to ensure they qualify for US sanctions exemptions granted in return for reducing oil trade with Iran and reviewed every six months.
“What we’re seeing is the politics bubbling away in the background and there are some simple logistical issues that may be responsible for this trend,” said Richard Gorry, managing director at JBC Asia.
“There is sizeable maintenance in Asia going on right now, which has cut crude demand in the region.”
Reuters
