Iran’s Crude Oil Exports to Fall 50% on Embargo, IEA Says
Shipments will fall by at least 800,000 barrels a day, David Fyfe, head of the IEA’s market and industry division, said by phone from Paris, citing discussions with market participants. Iran exported just below 2 million barrels a day last month, compared with 2.6 million in November, the IEA, adviser to 28 industrialized nations, said in a report today. Iran’s oil minister said exports haven’t decreased.
“It’s likely Iran will be casting around to try and find buyers for 800,000 barrels to 1 million barrels,” Fyfe said. “That sets the floor of what potential reductions in Iranian exports might be. It could be much bigger than that.”
U.S. and European Union leaders are increasing pressure on Iran over its nuclear program, which the government in Tehran says is for civilian purposes. Oil sales earned the Persian Gulf country, the Organization for Petroleum Exporting Countries’ second-biggest producer, $73 billion in 2010, accounting for about 50 percent of government revenue, according to the U.S. Department of Energy. Saudi Arabia is OPEC’s biggest exporter.
Iranian Oil Minister Rostam Qasemi rejected the IEA’s estimates and said the government has reduced its dependence on oil revenue. Neither production nor exports have fallen, and the country expects at least as much oil income this year as in 2011, he said in an interview in Kuwait.
World ‘Large Enough’
“We are exporting according to what we are supposed to do within OPEC,” Qasemi said. “The world is large enough and it is full of customers.”
Almost all buyers of Iranian crude will cut purchases because of sanctions, the IEA said. While there currently may be no physical supply disruption, European insurance companies have already announced the suspension of coverage for tankers calling at Iranian ports, according to the report.
Iranian crude production fell 1.5 percent to 3.38 million barrels a day in February, the least in at least three years, the IEA said.
While some European countries halted imports, India and South Korea increased purchases. Chinese imports fell 50 percent to 275,000 barrels a day in January because of a price dispute, which has now been resolved, according to the report. Some of Iran’s buyers have been able to secure discounts, the IEA said.
The 27 members of the European Union approved a ban on the purchase, transport, financing and insurance of Iranian oil on Jan. 23. Pre-existing contracts are exempt until July 1. The measure still has to be implemented by the European Commission, the bloc’s regulatory arm, before it becomes binding. The U.S. blocks access to its financial system for transactions with Iran’s central bank.
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