Iran’s oil exports plummet as sanctions bite: agency

LONDON - Reuters

In the months ahead, Iran may need to shut in production volumes, says to International Energy Agency.

Iran’s oil exports have fallen by an estimated 40 percent since the start of the year as Western sanctions tear into the country’s vital oil industry, the International Energy Agency (IEA) said yesterday.

The agency, which represents the interests of major consuming nations, said preliminary indications suggested that exports -- the lifeblood of Iran’s economy -- had fallen to 1.5 million barrels per day in April-May from 2.5 million at the end of 2011.

“In the months ahead, Iran may need to shut in production volumes if export markets remain similarly constrained and storage fills up,” the IEA said in its monthly report.

It added that it believed Iran was still producing 3.3 million bpd, down from 3.5 million last year and stockpiling unsold oil.

Tehran has denied it is experiencing problems with oil sales, despite mounting evidence that its major customers, including China, are turning down offers of cheap crude under pressure from Washington to cut trade ties.

Full EU embargo coming

On June 11 the U.S. government, which is aiming to choke off Tehran’s oil revenues and force a halt to nuclear development that it believes is aimed at making weapons, said India, South Korea, Japan and Turkey had made significant cuts to oil imports from Iran.

Iran says its nuclear program is for civilian purposes.

The European Union will impose a full embargo on Iranian oil from July 1. The measure will also effectively cut off tanker insurance, a major problem for Asian buyers who traditionally account for the bulk of Iran’s oil sales.

The IEA report came out days ahead of nuclear talks in Moscow between Iran and world powers - the United States, Britain, France, Germany, Russia and China.

The Organization of the Petroleum Exporting Countries (OPEC), of which Iran is a member, met in Vienna yesterday to discuss production running at a multi-year highs. U.S. ally Saudi Arabia has been stepping up supply to replace lost Iranian barrels. Earlier this year, oil prices rallied to $128 a barrel, their highest since 2008, on fears of a loss of Iranian production. But they have since fallen below $100 per barrel on signs of slowing economic growth in China, weak U.S. data and an escalation in Europe’s debt crisis.

The IEA said the world was better supplied with oil now than in recent years but warned against calling it an over-supplied market. “Nobody knows exactly how oil supplies will develop this summer.

Memories are indeed short: crude prices remain very high in historical terms, and are acting as a drag
on household and government budgets in OECD and emerging markets alike.”