By Staff Writer
The Trump administration has demanded that buyers of Iranian oil cut imports to zero beginning in November, in an attempt to force Tehran to negotiate a new nuclear agreement and to curb its influence in the Middle East.
In August, well ahead of the November 4th start date for a second round of U.S. economic sanctions, Iran’s crude oil and condensate exports are set to drop below 70 million barrels for the first time since April 2017.
Condensate is an ultra-light oil produced from natural gas fields. The total volume of crude and condensate set to load in Iran this month is estimated at 64 million barrels, or 2.06 million barrels per day (bpd). Preliminary trade flows data on Thomson Reuters Eikon compared this to a peak of 92.8 million barrels, or 3.09 million bpd, in April.
In an effort to keep buyer interest, the National Iranian Oil Co has slashed its crude prices. According to Reuters and trade data, it set the official selling price (OSP) for Iranian heavy crude for September loading to the largest discount since 2004.
Oil futures traded in London have surged to their highest since June, in anticipation of the loss of Iranian supply, as Iran is currently the third-largest producer among the members of the Organization of the Petroleum Exporting Countries. Its key customers’ purchases have all dropped in August, as some buyers, banks, and insurance companies already have suspended dealings in Iranian oil.
China is Iran’s biggest customer, but loadings bound for that country are set to fall to 18.4 million barrels in August — from 24 million barrels in July, which data shows, was its highest monthly volume this year. In order to work around the sanctions, China has switched to using Iranian tankers to deliver the country’s crude since July. They hope to sustain Iranian oil imports until at least October.
India is importing 8.2 million barrels, which is down from more than 20 million barrels. However, exports to India may rise, as the destination for about 11 million barrels of Iranian oil loading this month has yet to be identified.
Loadings for Japan have been scaled back to 3.4 million barrels in August, down for a second straight month, and by mid-September, Japanese refiners are expected to load their last Iranian oil. They are scheduled to arrive in Japan before November.
Since July, Iran has loaded no oil bound for South Korea.
For Europe, the data shows that cargos have been falling from a peak of 22.2 million barrels in March, down to about 12 million barrels in August. European companies like France’s Total have exited Iran, because they fear triggering U.S. sanctions. Still, Iran’s president has urged the remaining signatories to its 2015 nuclear agreement to save the pact.
