Iranian oil exports could halve in 2019 as United States focuses on waivers

Iran’s Economy Minister Farhad Dejpasand

Analysts said expectations of an economic slowdown in coming months was outweighing supply-side risks to crude markets from the reintroduced us sanctions against Iran, which started on Monday.

In addition, Afghanistan will be allowed to continue importing Iranian petroleum products, the spokesman said.

JP Morgan said the "sell-off in oil was due to excessive crude" as production levels climb while "Iranian supply was still in the market".

For Iran, however, the waivers still mean it will likely receive no direct income from its sales as the United States freezes the money.

It could also be argued that it was a rare example of "realpolitik" from the Trump administration, with the tacit recognition that cutting Iran's exports to zero in one fell swoop would boost crude prices, hurting not only U.S. consumers but also the rest of the world.

Iran's oil minister on Thursday predicted a painful time ahead for worldwide oil customers as USA sanctions take hold, saying waivers that Washington granted to eight major oil-importing countries are not enough for market demands.

President Trump has made it clear that they have not demanded zero oil imports from Iran at one go as this would have led to "oil shock".

On Wednesday, Washington warned global shipping and insurance industries not to allow Iranian oil tankers into their territorial waters or ports, saying such access may run afoul the reimposed sanctions, in addition to increasing the possibility of catastrophic economic and environmental damage if any accidents occur.

This group of eight buyers imported over 80 percent of Iran's roughly 2.6 million barrels per day (bpd) of oil exports past year, Refinitiv Eikon data shows.

However, Washington granted temporary waivers to eight countries, including China and India, the biggest purchasers of Iran's crude. Strong crack margins should ensure a strong pick-up in refinery demand for crude oil - leading to lower stocks - once they return from maintenance. "The US has given waiver to some countries including India".

Crude has tumbled nearly 20 percent since touching a four-year high last month as bearish supply signals around the globe crowded out concerns about disrupted exports from Iran and Venezuela.

The sanctions, however, will inevitably erode Iran's state finances and raise already high inflation and jobless rates, making life harder for ordinary Iranians.

Both sources were not permitted to talk to the media about Iran sanctions and declined to be identified.

On Monday, the USA imposed "the toughest ever" sanctions on Tehran aimed at altering the Iranian regime's "behaviour". Still, Iran demonstrated considerable resilience and ingenuity in coping with earlier worldwide sanctions, and there is little to suggest Tehran could not do this again.

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