TOKYO: Iran’s top four oil clients slightly reduced imports from the sanction-hit nation in July and purchases remain down about a fifth for the year, as the United States keeps pressuring buyers to take less and less of the crude.
Asia may start to feel pinched, however, from the already deep cuts in the Iranian imports as the supply outlook for some of the alternative grades worsens. Asian refiners need to ramp up runs to meet peak winter demand and further cuts in shipments from Iran could increase input costs.
Crude premiums in Asia are already at multi-month highs, slashing the profit from processing a barrel of crude into fuels nearly two-thirds from a month earlier. Buyers are also on edge, worried a strike against Syria could disrupt supplies from key Middle Eastern exporters and boost prices even higher.
Oil shipments from Iran have more than halved from pre-sanction levels as the US and EU sanctions have made it difficult to insure tankers carrying the crude. The measures have also forced refiners to find new ways to pay Tehran, because it is cut off from international banking networks.
Iran’s clients have had to switch to other suppliers such as nearby Iraq and the United Arab Emirates.
“It’s also an opportunity for Saudi Arabia to push back its output to 10 million bpd as they’ve always shown that they are willing to step up production,” said Alex Yap, FGE analyst in Singapore.
China and other major Asian buyers of Iranian crude have to continue curbing purchases to win waivers to US sanctions aimed at ending the country’s disputed nuclear programme.
The US House of Representatives in July easily passed a bill that is the first to spell out exactly how much Iran’s oil exports should be cut, setting a goal of reducing the shipments by another 1 million bpd to near zero.
The bill has to be approved by the US Senate and signed by President Barack Obama before becoming law.
In July, the four major Asian buyers imported 796,047 barrels per day (bpd) of Iranian crude in July, down from 798,400 bpd a year ago, according to official government data and tanker arrival schedules.
Reuters
