Iran’s oil exports lowest amid US’ broadening sanctions plans

LONDON / NEW DELHI / WASHINGTON - Reuters

File photo of Iranian crude oil supertanker ‘Delvar’ anchored off Singapore. REUTERS photo

Western sanctions drove Iran’s crude exports to their lowest in decades in May, according to industry sources and tanker-tracking data, even before Washington toughens measures aimed at squeezing oil sales further.

But the government sources, who spoke on condition of anonymity, said all of the countries, including China, India, South Korea Turkey and Singapore are expected to get exceptions.

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.

Steepest cut from Japan, Turkey imports same

Oil sanctions are one of the main tools Washington is using to choke off funding to Tehran’s nuclear programme. Countries in the West suspect its purpose is to seek the capability to make nuclear weapons. Iran says the programme 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.

The government sources, who spoke on condition of anonymity, said all of the countries, including China, India, South Korea Turkey and Singapore are expected to get exceptions.

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.

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.