LONDON (Reuters) – Iran’s oil exports have picked up modestly in January for the third consecutive month, according to sources who track tanker movements, adding to signs that the easing of sanctions pressure on Tehran is helping its oil exports to recover.
The increase in shipments is around 50,000 barrels per day (bpd), according to one tracker company, which would take Iranian exports to around 1.2 million bpd for January and add about $150 million a month to Tehran’s depleted oil revenues.
The small rise is unlikely to be a direct consequence of the easing of sanctions, which only took effect on Monday, and shippers say they are still waiting to finalize the paperwork now insurance restrictions on vessels carrying Iranian crude have been eased.
But the interim deal, which was agreed back in November in return for curbs on Iran’s nuclear program, has improved sentiment and reduced risk for buyers, giving Iranian exports a much-needed boost in the months since.
«The suspension of oil export sanctions takes the pressure off Iran’s oil sector, which was close to running out of storage capacity for its production surplus and in danger of incurring irreparable losses stemming from the forced closure of oil fields,» said Mark Dubowitz, of U.S.-based think-tank the Foundation for Defense of Democracies and a proponent of tough sanctions on Iran.
«There will be reduced transaction costs to service shipments of crude. And Iran now can cease to rely on foreign-owned vessels to transport goods, freeing up shipping capacity to deliver its oil.»
A second tracking source familiar with Iran’s shipments, who estimated an increase of 60,000 bpd in January, said he had seen a pick-up «especially in India».
«China’s purchases remain firm, with Turkish imports at around 105,000 barrels per day. Syria is still picking up modest cargoes,» the source said.
A sustained increase in exports from Iran, as well as a recovery in Libyan exports, could weigh on oil prices in 2014. So far, though, the rise in Iranian supplies is modest and restricted to existing customers, mostly in Asia.
One major Chinese buyer said their December-January import requirements would hold steady, while a separate buyer said they were expected to have raised imports since November to top up on cuts from previous months.
A source with a Japanese buyer of Iranian oil said import volumes were likely to remain steady in the coming months.
«This is a country with falling demand and refinery capacity, so there’s not much enthusiasm for raising term volumes in general,» a separate oil market source in Japan said.
INSURANCE RELIEF
Sources in South Korea with knowledge of Iranian oil imports said volumes remained steady.
«It is hard to make any move as this is a temporary sanction-easing measure. We will continue to import the oil at our previous levels, and I don’t see any change within this year as our contract is yearly based, and insurance issues are not yet solved,» one Seoul-based source said.
Oil industry sources in India say they expect Iranian oil imports to remain steady in coming months.
«So far we have not heard anything from insurers. If they withdraw the embargo that stops us from processing Iranian crude, then we can buy it, depending on the economics,» said A.K. Basu, managing director at Chennai Petroleum Corp, a unit of leading refiner Indian Oil Corp.
For six months from Monday, the European Union and the United States have eased some sanctions including restrictions on ship insurance, which became available for the first time since mid-2012. Vessels transporting Iranian crude have previously been left with limited alternatives, mostly set up by importers.
«Normal services have been partially resumed in relation to those activities, which are now permissible for a temporary six-month period subject to further review and possible extension thereafter,» said Andrew Bardot, executive officer of the International Group of P&I clubs, an association whose members insure the majority of the world’s tanker fleet.»As from July 21, there will no longer be this flexibility, obviously pending any further extension or renewal.»
Specialist Protection & Indemnity (P&I) insurers, mutually owned by shipping lines, dominate the market for insuring ocean-going vessels against pollution and injury claims, the biggest costs when a tanker sinks.
However, companies still under sanctions include top Iranian oil tanker group NITC. Ship insurer UK P&I Club said last week a continuing prohibition on dealings with designated persons or entities remained in place.
PRODUCTION AMBITIONS
The International Energy Agency said in its monthly report on Tuesday that Iranian exports rose in December by 50,000 bpd to 1.15 million bpd, and could increase further now shipments are easier to insure.
«The relaxation in tanker insurance provisions in the current sanctions regime may lead to small increases in Iranian crude exports to existing customers in the short term,» said the IEA, which advises industrialized countries on oil policy.
The sanctions imposed in 2012 on Iran have led to a drop in Tehran’s production – output is down 1 million bpd since the start of 2012 to around 2.75 million bpd – and lost it billions in oil revenue.
Top Iranian officials say the country can raise production to 4 million bpd within six months of sanctions being lifted. Western experts say 3-3.5 million bpd is more likely.
Still, a return to Iran’s pre-sanction export level of over 2 million bpd is some way off. Customers including Western oil companies forced by the sanctions to cut ties with Iranian oil are still steering clear.
«Talk of the sanctions being lifted is making people more optimistic,» said an industry source. «But the reality of the situation has not changed much.»
Iran is also looking at other ways to boost exports. Sources told Reuters earlier this month that Iran and Russia were negotiating an oil-for-goods swap worth $1.5 billion a month under which Moscow would buy up to 500,000 bpd of Iranian oil in exchange for Russian equipment and goods.
(Additional reporting by Meeyoung Cho in Seoul, Osamu Tsukimori in Tokyo, Nidhi Verma in New Delhi and Aizhu Chen in Beijing; Editing by Will Waterman)
The increase in shipments is around 50,000 barrels per day (bpd), according to one tracker company, which would take Iranian exports to around 1.2 million bpd for January and add about $150 million a month to Tehran’s depleted oil revenues.
The small rise is unlikely to be a direct consequence of the easing of sanctions, which only took effect on Monday, and shippers say they are still waiting to finalize the paperwork now insurance restrictions on vessels carrying Iranian crude have been eased.
But the interim deal, which was agreed back in November in return for curbs on Iran’s nuclear program, has improved sentiment and reduced risk for buyers, giving Iranian exports a much-needed boost in the months since.
«The suspension of oil export sanctions takes the pressure off Iran’s oil sector, which was close to running out of storage capacity for its production surplus and in danger of incurring irreparable losses stemming from the forced closure of oil fields,» said Mark Dubowitz, of U.S.-based think-tank the Foundation for Defense of Democracies and a proponent of tough sanctions on Iran.
«There will be reduced transaction costs to service shipments of crude. And Iran now can cease to rely on foreign-owned vessels to transport goods, freeing up shipping capacity to deliver its oil.»
A second tracking source familiar with Iran’s shipments, who estimated an increase of 60,000 bpd in January, said he had seen a pick-up «especially in India».
«China’s purchases remain firm, with Turkish imports at around 105,000 barrels per day. Syria is still picking up modest cargoes,» the source said.
A sustained increase in exports from Iran, as well as a recovery in Libyan exports, could weigh on oil prices in 2014. So far, though, the rise in Iranian supplies is modest and restricted to existing customers, mostly in Asia.
One major Chinese buyer said their December-January import requirements would hold steady, while a separate buyer said they were expected to have raised imports since November to top up on cuts from previous months.
A source with a Japanese buyer of Iranian oil said import volumes were likely to remain steady in the coming months.
«This is a country with falling demand and refinery capacity, so there’s not much enthusiasm for raising term volumes in general,» a separate oil market source in Japan said.
INSURANCE RELIEF
Sources in South Korea with knowledge of Iranian oil imports said volumes remained steady.
«It is hard to make any move as this is a temporary sanction-easing measure. We will continue to import the oil at our previous levels, and I don’t see any change within this year as our contract is yearly based, and insurance issues are not yet solved,» one Seoul-based source said.
Oil industry sources in India say they expect Iranian oil imports to remain steady in coming months.
«So far we have not heard anything from insurers. If they withdraw the embargo that stops us from processing Iranian crude, then we can buy it, depending on the economics,» said A.K. Basu, managing director at Chennai Petroleum Corp, a unit of leading refiner Indian Oil Corp.
For six months from Monday, the European Union and the United States have eased some sanctions including restrictions on ship insurance, which became available for the first time since mid-2012. Vessels transporting Iranian crude have previously been left with limited alternatives, mostly set up by importers.
«Normal services have been partially resumed in relation to those activities, which are now permissible for a temporary six-month period subject to further review and possible extension thereafter,» said Andrew Bardot, executive officer of the International Group of P&I clubs, an association whose members insure the majority of the world’s tanker fleet.»As from July 21, there will no longer be this flexibility, obviously pending any further extension or renewal.»
Specialist Protection & Indemnity (P&I) insurers, mutually owned by shipping lines, dominate the market for insuring ocean-going vessels against pollution and injury claims, the biggest costs when a tanker sinks.
However, companies still under sanctions include top Iranian oil tanker group NITC. Ship insurer UK P&I Club said last week a continuing prohibition on dealings with designated persons or entities remained in place.
PRODUCTION AMBITIONS
The International Energy Agency said in its monthly report on Tuesday that Iranian exports rose in December by 50,000 bpd to 1.15 million bpd, and could increase further now shipments are easier to insure.
«The relaxation in tanker insurance provisions in the current sanctions regime may lead to small increases in Iranian crude exports to existing customers in the short term,» said the IEA, which advises industrialized countries on oil policy.
The sanctions imposed in 2012 on Iran have led to a drop in Tehran’s production – output is down 1 million bpd since the start of 2012 to around 2.75 million bpd – and lost it billions in oil revenue.
Top Iranian officials say the country can raise production to 4 million bpd within six months of sanctions being lifted. Western experts say 3-3.5 million bpd is more likely.
Still, a return to Iran’s pre-sanction export level of over 2 million bpd is some way off. Customers including Western oil companies forced by the sanctions to cut ties with Iranian oil are still steering clear.
«Talk of the sanctions being lifted is making people more optimistic,» said an industry source. «But the reality of the situation has not changed much.»
Iran is also looking at other ways to boost exports. Sources told Reuters earlier this month that Iran and Russia were negotiating an oil-for-goods swap worth $1.5 billion a month under which Moscow would buy up to 500,000 bpd of Iranian oil in exchange for Russian equipment and goods.
(Additional reporting by Meeyoung Cho in Seoul, Osamu Tsukimori in Tokyo, Nidhi Verma in New Delhi and Aizhu Chen in Beijing; Editing by Will Waterman)
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