Iran crude oil exports drop as sanctions take hold
By BENOIT FAUCON
LONDON -- Iran's crude-oil exports appear to have dropped sharply for the first time this year according to an authoritative consultancy, the strongest sign so far that sanctions targeting Tehran's most-important revenue stream are working.
A report by Swiss oil-shipping specialist Petro-Logistics S.A. foresees a decline in Iran's oil exports of 300,000 bpd this month to 1.9 million bpd, according to a person familiar with the document, as buyers cut purchases ahead of a European Union embargo on Iran oil.
Numbers tend to be preliminary, however, at this time of the month.
To ratchet up pressure on Iran because of its nuclear program, the EU in January agreed to ban the purchases of Iranian crude oil from July 1 on its territory while the US is pressuring Asian buyers to cut their Iran oil imports.
But Iran's crude-oil exports had been broadly stable at around 2.2 million bpd until now as the country offered flexible contract terms.
Iranian oil officials couldn't be reached for comment Friday, but they have repeatedly said oil sales, which provide the majority of the country's exports revenue, remained steady.
Yet evidence has been mounting that oil buyers have started to back away from Iranian oil and switch to oil from its largest rival, Saudi Arabia.
On Tuesday, the Obama administration exempted 10 EU countries and Japan from sanctions that would have forced them to stop dealing with Iran's central bank to avoid being cut off from the US financial system.
The US praised those countries for reducing dependency on oil from the Islamic republic.
Washington had been using a ban on oil trades with Iran's central bank, which comes into force June 28, to negotiate waivers with Iran oil buyers in exchange for cutting their purchases.
Earlier this month, Japan, Iran's third-largest customer, said it reduced its oil imports from Tehran in January by 12% compared with a year earlier.
In the European Union, France's Total has stopped buying Iranian oil.
In both cases, the loss of Iranian barrels was made up by Saudi Arabia. Saudi production reached its highest level in 30 years in February, according to the International Energy Agency.
On top of the US sanctions against Iran's central bank and the EU embargo, oil buyers are facing challenges to buying Iranian oil due to sanctions on items ranging from shipping to insurance.
This has led the International Energy Agency to predict earlier this month that sanctions could nearly halve Iran's oil exports when they hit the hardest this summer.
Iran has responded by sweetening its payments terms, offering open credit and bartering oil for food to entice crude-oil buyers.
Pressure against Iran's nuclear program has now taken center stage amid a hotly contested election year in the US.
Iran says its nuclear program is peaceful, but a November report by the International Atomic Energy Agency voiced suspicions that it has military aims.
Dow Jones Newswires
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