Azernews.Az

By Sara Rajabova

Oil Minister Rostam Qasemi said on Sunday that Iran has successfully bypassed sanctions imposed on its energy sector.

Qasemi said Iran, which heavily suffered from the sanctions within two months of their application, could really withstand them and managed to resume crude oil exports.

However, the export of Iranian oil and the revenues dropped sharply in June and July over the sanctions imposed by the EU and the U.S.

"Difficult conditions were created for the Iranian oil sector in June 2012, because no vessel was authorized to sail towards Iran.... Moreover, crude oil tankers were denied insurance coverage at that time," the minister said.

Iranian oil exports hit a low in July of less than 1 million barrels a day compared to 2.2 million barrels a day in 2011. Furthermore, Iran had to halt fuel exports.

Later, oil exports increased slightly in August and substantially in November with 1.2 million barrels per day, according to IEA statistics.

Besides, Iran managed to sell a rising volume of fuel oil to generate revenue equal to up to a third of its crude exports, namely, $410 million per month.

However, the increase in oil sales does not mean that Iran's economic difficulties are over. Iran probably would increase the oil exports, but it again will face some problems.

Thus, the EU last Friday agreed new sanctions against Iran, adding 18 companies or institutions and one person to a blacklist aimed at forcing stalled talks on Tehran's nuclear program to resume.

The toughest EU measures include bans on financial transactions, sales to Iran of shipping equipment and steel, and imports of Iranian natural gas, adding to earlier bans, including on the OPEC producer's oil.

Besides, the U.S. Congress approved the final version of the annual defense policy bill last Friday that alongside other issues calls for tightening sanctions on Iran over its nuclear activities.

The new sanctions target shipbuilding, shipping and energy sectors with additional restrictions in an effort to ratchet up pressure on Tehran to abandon its uranium enrichment.

Also, U.S. sanctions prevent states from moving money used to buy oil outside of the purchasing country and the funds can be used only for non-sanctioned, bilateral trade between that country and Iran.

Any bank that repatriates the money or transfers it to a third country faces a sanction risk, including being cut off from the U.S. financial system.

Taking into account the fact that the value of Iran's oil exports is far higher than what it imports from its biggest customers, then it could face huge problems with transferring the revenues.

Another problem is that the importers of Iranian oil pressure Iran for better contract terms and to accept the payment in currencies such as the Chinese yuan and the Indian rupee, which is sure to decrease the revenues. They have faced a liquidity shortage and have to borrow money with high rates from domestic markets.

So, the Asian buyers of Iranian crude will deepen import cuts in 2013 and struggle to send cash to Tehran to pay for oil as tightening Western sanctions hamper the flow of hard currency to Iran's coffers.

China has already cut its oil imports from Iran by 23 percent to 422,800 barrels per day (bpd) from January-November this year. Also, India's oil imports from Iran fell 17 percent to 270,000 bpd in the first eight months of the contract year that started in April, while imports by South Korea decreased by around 40 percent.

Japan's oil imports are on the downward trend as well.

Taking into consideration all these factors, Iran may increase the oil exports with new methods, but, in fact, Iranian oil is not of high demand on the market any more. Therefore, it is obvious that the exports and the income as a result are likely to drop in the next year, which will cause huge problems for the Iranian economy, analysts say.