Iran oil exports set to drop ahead of US sanctions
SINGAPORE - Iran’s crude oil and condensate exports in August were expected to drop to less than 70 million barrels for the first time since April 2017, well ahead of the early November implementation of the second round of US economic sanctions.
The United States asked buyers of Iranian oil to cut imports to zero starting in November to force Tehran to negotiate a new nuclear agreement and to curb its influence in the Middle East.
The total volume of crude and condensate, an ultra-light oil produced from natural gas fields, to load in Iran in August was estimated at 64 million barrels (2.06 million barrels per day), versus a peak of 92.8 million barrels (3.09 million barrels per day) in April, preliminary trade flows data on Thomson Reuters Eikon showed.
The National Iranian Oil Company slashed its crude prices to keep buyer interest amid the August export drop. It has set the official selling price for Iranian Heavy crude for September loading at the biggest discount since 2004, Reuters and trade data indicated.
Iran is the third-largest producer among OPEC and benchmark oil futures traded in London surged to their highest since June in anticipation of the loss of Iranian supply.
Imports by its key customers all dropped in August as some buyers, banks and insurance companies have suspended dealings in Iranian oil.
Loadings bound for top customer China were expected to fall to 18.4 million barrels in August, from 24 million barrels in July, which was its highest monthly volume this year, the data showed.
China has switched to using Iranian tankers to deliver the country’s crude since July to side-step the sanctions and sustain Iranian oil imports until at least October.
The volume of oil heading to India is 8.2 million barrels, down from more than 20 million barrels each month since April. Exports to India could rise as the destination for about 11 million barrels of Iranian oil loading this month are yet to be identified.
Japan-bound loadings were scaled back to 3.4 million barrels in August, down for a second straight month. Japanese refiners are expected to load their last Iranian oil by mid-September so they will arrive in Japan before November.
Iran has not loaded any oil bound for South Korea since July.
Cargoes loading for Europe have been falling from a peak of 22.2 million barrels in March to about 12 million barrels in August, the data showed.
European companies such as France’s Total are walking away from Iran for fear of triggering US sanctions although Iran’s president has urged the remaining signatories to its 2015 nuclear agreement to save the pact.
The United States withdrew from the agreement in May and ordered the renewed sanctions, the first of which went into effect on August 7.