Sanctions push Iran's oil exports to lowest in decades
Western sanctions drove Iran's crude exports to the lowest in
decades in May, according to industry sources and tanker-tracking
data, even before Washington toughens measures aimed at squeezing
oil sales further, Reuters reported.
Crude shipments dropped to 700,000 barrels per day (bpd) last
month, the data from sources showed, about a third of Iran's oil
exports before the current round of sanctions.
U.S. and European sanctions aimed at pressuring Tehran over its
suspected pursuit of nuclear weapons have already more than halved
Iran's shipments - costing Iran billions of dollars in revenue
since the start of 2012. And Washington is now seeking to cut
shipments to less than 500,000 bpd through tighter sanctions.
Purchases by major Asian customers last month were about 12 percent
down on April, industry sources said. Sales in April had already
taken a hit after Japan, the world's third-biggest oil consumer,
almost stopped Iranian imports entirely.
Oil sanctions are one of the main tools Washington is using to
choke off funding to Tehran's nuclear program. Countries in the
West suspect its purpose is to seek the capability to make nuclear
weapons. Iran says the program is for generating power and medical
devices.
With oil trading just above $100 a barrel, the decline in May
exports versus April would mean a loss of more than $300 million
for Iran, squeezing revenue for a nation that has already seen its
currency plunge.
The drop in purchases in May, if confirmed by official import data,
would increase the prospect of Washington granting Tehran's top
buyers more leeway to avoid U.S. penalties even if they maintain
Iranian oil purchases.
The United States is expected to renew waivers on Iran oil
sanctions for India, China and several other countries as soon as
Wednesday.
Before the latest sanctions, Tehran sold about 2.2 million bpd of
crude mainly to Asia, Europe and Africa.
The steepest cuts in April had been made by Japan, amid uncertainty
about whether sovereign insurance for tankers carrying Iranian oil
would be extended beyond March.
At just 7,549 bpd, imports from Iran were down 96 percent from the
same month a year ago and the lowest since Japan imported no
Iranian crude in July 2012.
Exports slide
Tokyo began offering insurance guarantees in June last year after
top reinsurers, mostly based in Europe, halted their cover for
ships carrying Iranian crude due to sanctions.
A Japanese transport ministry official in charge of the scheme said
new contracts covering three tankers were signed on April 1,
compared with 13 that were covered up to March 31. The number has
subsequently risen to 8.
That indicates May imports were lower than a year earlier, because
fewer ships were eligible to load Iranian oil. Loadings in May
likely fell versus April, industry sources familiar with Iranian
crude shipments said. One source pegged the volume at
120,000-130,000 bpd, about 60,000-100,000 bpd lower than April.
Imports in May by South Korea, another of Iran's top customers,
likely fell from April's 139,400 bpd - already down nearly 45
percent from a year ago.
Of the two Korean refiners - SK Energy and Hyundai Oilbank - which
import Iranian crude, Hyundai receives cargoes once every two
months and is unlikely to have imported anything in May.
China, Iran's biggest buyer, purchased about 371,500 bpd in April,
down 4.3 percent from a year earlier. Shipments were likely to hold
steady in May and June, a regular buyer said.
India's purchases could average about 190,000 bpd spread over April
and May, based on industry and a preliminary tanker arrival data.
That's about a quarter less than the 250,600 bpd imported on
average in the first three months of the year.
Turkey is expected to import the same amount in May and June,
roughly 100,000 bpd in three cargoes, as has been the case in the
past 9 months.