Azernews.Az

By Sara Rajabova, AzerNews Staff Writer

The International Energy Agency (IEA) says the demand for Iranian crude has increased despite sanctions imposed against the country's oil exports by the EU and U.S.

The IEA reported on Wednesday that imports of Iranian oil increased from an estimated 930,000 barrels a day in July to 1.1 million barrels per day in August.

Among the countries demanding Iranian oil, Turkey increased its imports in August some 150,000 barrels per day to 200,000 barrels.

Malaysia also raised its imports -- by 100,000 bpd to 130,000 bpd, while Japan and India favored cargoes of Iranian oil with their own state-backed insurance coverage, which is crucial in shipping oil because of possible environmental claims and liability from oil spills.

Meanwhile, China, South Korea, and India are among countries expected to increase their imports in September, the IEA observed, noting an Iranian initiative to allow oil sales through the private sector.

However, the IEA said reduced supplies from Iran had partially been offset by increased production from other big oil exporters, such as Nigeria, Angola and Iraq. Iraqi oil output exceeded 3m bpd in August, its highest level in more than three decades. OPEC member states increased output by 254,000 barrels a day in August.

The rare disclosure of sensitive Iranian oil data -- made in the monthly oil market report of OPEC -- comes amid intense scrutiny over the effect of international sanctions against the Islamic Republic.

In the OPEC report, Iran pegs its August crude-oil production at 3.7 million barrels a day, up 5% from last year and broadly stable since the beginning of the year.

But secondary sources cited by OPEC -- shipping and oil-industry experts with close knowledge of the country's production -- put Iran's output at 2.8 million barrels a day, about 1 million barrels a day lower than Iran's estimates and 24% down compared with last year.

By contrast, Iran's own estimates for last year are similar to unofficial numbers. Other OPEC members generally disclose numbers that are much more consistent with secondary sources.

Iran oil officials, in public statements, continue to insist that exports -- which are behind any variation in production numbers -- are unaffected by sanctions.

Iran's production numbers are closely watched by Western nations, as they consider how to balance considerations over new sanctions with the need to avoid a new oil-price spike.

This mounting production is in response to global oil demand growth, the estimates of which OPEC kept broadly unchanged at about 900,000 barrels a day.

Although Iran managed to increase its exports of crude oil last month, the rise is likely to be temporary as the U.S. and EU prepare to tighten sanctions on Tehran over its nuclear program.

Sanctions on Iran have reduced its oil production to 2.85m bpd, a 22-year low. Output is now 650,000 bpd lower than at the end of last year.

But that has caused ructions on global oil markets, with about 1m bpd withdrawn from supplies -- or nearly as much oil as the world lost in 2011 during the civil war in Libya.

The U.S. and the EU approved new sanctions against Iran's oil and financial sectors at the beginning of 2012. The embargoes aim to prevent other countries from purchasing the Iranian oil or transacting with the Central Bank of Iran.

Washington and the EU have declared that the bans are meant to force Iran to abandon its nuclear energy program, which they claim to include a military component.

Iran has vehemently refuted the allegation, arguing that as a committed signatory to the nuclear Non-Proliferation Treaty and a member of the International Atomic Energy Agency, it is entitled to use nuclear technology for peaceful objectives.