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Iran Seen Keeping Oil Sales Steady as Nuclear Talks Extended

Iran Seen Keeping Oil Sales Steady as Nuclear Talks Extended
An oil tanker is seen off the port of Bandar Abbas, southern Iran. Photographer: Atta Kenare/AFP via Getty Images

Iran’s oil exports will remain near the highest level in two years as talks with six global powers over the Persian Gulf state’s nuclear program are extended for four more months, according to six analysts in a survey.

Sales of crude and condensates by Iran to six main buyers averaged 1.27 million barrels a day in the first six months of the year, according to data compiled by Bloomberg from customs statistics and International Energy Agency estimates. Shipments will stay near that level in the second half, according to the analysts Bloomberg surveyed on July 16 and 17.

“Iran’s going to want oil exports to keep edging up, and the U.S. has been willing to allow some wiggle room,” Robin Mills, an analyst at Manaar Energy Consulting & Project Management, said by phone from Dubai yesterday. “The extension is a sign they’ve made progress on nuclear talks and think they can reach a deal. The U.S. won’t let oil exports get in the way.”

Negotiators from the U.S., Russia, China, Germany, France and the U.K. agreed with Iranian officials to continue talks at intervals until Nov. 24, U.S. Secretary of State John Kerry said in comments posted on the State Department website on July 18. The parties failed to reach yesterday’s deadline for a deal ensuring Iran’s nuclear program is peaceful in return for lifting sanctions. The constraints are hurting Iran’s economy by depriving it of income from its main export.

OPEC Producer

The two sides didn’t specifically address crude-export levels when announcing the decision to extend the period for talks. Terms of the extension agreement are similar to those in the previous six-month period, Catherine Ashton, European Union foreign policy chief, and Wan Qun, the Chinese envoy to the talks, said Nov. 19.

The U.S. lets six buyers -- China, India, Japan, South Korea, Turkey and Taiwan -- take crude from Iran, so long as that country’s total sales stay at about 1.1 million barrels a day. The target doesn’t include sales of condensate, a light petroleum liquid often found with oil or gas.

Exports from the third-largest producer in the Organization of Petroleum Exporting Countries have plunged from about 2.5 million barrels a day prior to 2012 when the U.S. and EU tightened sanctions. Iran’s shipments of crude and condensate to its six main buyers averaged 1.17 million barrels a day in 2012 and 1.04 million in 2013, according to the data compiled by Bloomberg from importers’ customs statistics.

Maximizing Profit

Crude and condensate sales may rise in the second half to at least 1.4 million barrels a day and as much as 1.5 million as Iran tries to maximize profit, Abhishek Deshpande, a commodities analyst at investment bank Natixis SA in London, said by phone July 17.

Exports have risen this year as Iran sold crude from storage to China for that country’s strategic petroleum reserve, Richard Mallinson, an analyst at consultants Energy Aspects in London, said by phone July 17. He estimates that total shipments may decline to about 1.2 million barrels a day on average as less Iranian oil is available from storage.

All six analysts surveyed by Bloomberg said there will there will be little change to Iran’s exports compared with the first half of the year. Three predicted a slight decline or unchanged shipments, the same number as anticipate slight gains.

Brent crude traded at about $107 a barrel on average last week, after slipping from a nine-month high of $115.71 on June 19.

Iran says its nuclear program is intended for civilian energy and medical research. The U.S. and other world powers accuse Iran of seeking a capability to produce nuclear weapons.

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