Sunday, 19 May
IRAN-OIL-EU-SANCTIONS-EXPORTS,LEAD-FOCUS EU embargo already hurting Iran oil exports
come fully into effect on Sunday, on the heels of further US
sanctions, has already bitten deeply into the Islamic republic's
all-important oil sector.
Despite official denials, Iran oil exports have plummeted some 40
percent in the past six months, to 1.5 million barrels per day (mbpd),
according to the International Energy Agency (IEA).
Storage facilities and anchored tankers are close to saturation as
Iran tries to avoid cutting production from its oil fields, several
foreign experts in Tehran say.
The IEA said up to 42 million barrels of oil were being kept in the
stationary tankers.
It added, in its latest Oil Market Report of June 13, that Iran oil
exports could fall further in the second half of this year. It
cautioned that its data were preliminary and challenged by Iran
"routinely" switching off mandatory tracking devices on its oil
tankers.
Iran disputes the data and insists it is exporting 2.1 to 2.2 mbpd.
Asked about the IEA's numbers, Oil Minister Rostam Qasemi told
Tuesday's edition of the Shargh newspaper: "Those are their figures.
For the moment, our exports haven't gone down a lot."
He also said that "we don't have a lot of oil (stored) at sea -- we
are transporting our oil with our own tankers" to several countries.
The European Union, which up to last year imported some 600,000 bpd,
or 20 percent of Iran's exports, announced on January 23 it would
phase in its embargo which becomes fully effective on July 1.
On Monday, the EU citing "a review of the measures" confirmed the
embargo would be enforced from Sunday.
Most EU member states have already implemented cuts, with Spain and
Greece halting imports in April.
Italy, Europe's biggest importer of Iranian crude (180,000 bpd), is
trailing but expected to follow suit within months, as soon as Iran
delivers oil to Italian company ENI as reimbursement of a debt of
hundreds of millions of euros.
European oil companies such as Shell and Total have suspended their contracts.
The EU embargo, imposed to pressure Iran to roll back its
controversial nuclear programme, is coupled with US sanctions hitting
Iran's financial sector.
On Thursday, the US measures will toughen when foreign companies that
do business with Iran's oil sector will be threatened with US
penalties unless their countries are granted exemptions on the basis
of Iran oil import cuts.
Turkey, Iran's neighbour to the north and its fifth-biggest oil
customer, has made its sole refiner, Tupras, agree to trim Iran crude
oil purchases by 20 percent and instead source from Libya.
South Africa, another important customer, has also gone with other suppliers.
In Asia, which absorbs 70 percent of Iran's oil exports, the situation is mixed.
India, Iran's number two customer, has announced an 11-percent cut to
Iran oil imports this year, and South Korea, the third biggest
customer, has axed 40 percent from its Iran input.
Japan, the fourth-biggest customer, slashed Iran oil imports by 65
percent in April while boosting shipments from Saudi Arabia.
But China -- the top buyer of Iranian crude -- has reportedly recently
been bringing its imports back up towards its previous 400,000 bpd
level after a dip earlier this year attributed to a row with Iran over
prices and payment.
Beijing steadfastly refuses to cede to the US pressure.
---- Payment and prices a problem ----
Even where Iran is still selling its black stuff, repatriating the
petrodollars generated -- and they amounted to $100 billion in 2011 --
is increasingly problematic because of the US financial squeeze.
Tehran is now accepting payment in other nations' currencies, or is
resorting to bartering its oil for food and goods.
And to ensure oil exports to some destinations, Iran is offering
discounts of up to $20 per barrel to countries such as Pakistan, one
European oil executive said.
It is even using its own tanker fleet to deliver crude, to get around
the problem of cargo insurance posed by the looming EU embargo,
according to international oil experts.
Another blow to Iran's vital oil export revenues comes from the price for oil.
After a skyrocketing rise to a March peak, prices have tumbled to $90
a barrel for Brent reference crude. Analysts believe they could fall
further this year as Europe's debt crisis deflates the global economy.
That is far away from Iran's predictions that the world would be
unable to cope with reduced Iranian oil exports, and that the price
would jump to $150 a barrel.
"Iran hopes a price rise will compensate for its lowered exports, but
increased production in other countries, especially Saudi Arabia, have
allowed a gradual phase-in of the embargo that has not destabilised
the market," one European expert said in Tehran.
"Between the cut in exports, the discounts, the payment in local
money, and the difficulty in repatriating the cash, the sanctions are
starting to cost Iran dearly," he said.
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