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Page added on March 23, 2012

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Iran oil exports fall as sanctions take toll

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Iranian oil exports have fallen significantly in March, industry sources said on Friday, as some buyers stop or scale back purchases to abide by Western sanctions aimed at slowing Tehran’s nuclear program.

Crude exports from Iran appear to have fallen this month by around 300,000 barrels per day (bpd), or 14 percent, according to estimates from industry consultant Petrologistics and a leading European oil company. A source at a third oil company said it too had noted a decline in Iranian exports.

It is the first sizeable drop in oil shipments from the OPEC producer since the European Union announced in January plans to embargo Iran’s crude from July and Washington and Brussels sanctioned Iran’s central bank.

Oil prices rose on the news, with Brent crude jumping to as high as $127.06 a barrel, up $3.96 and just $20 short of an all-time high reached in 2008. Prices later eased to $125 a barrel.

“This is fundamentally very bullish,” said Mike Wittner, head of commodities research at Societe Generale in the United States. “I think Iranian exports are going to go down much more, as the sanctions bite. It’s a logical reaction for the market to go up on this.”

According to Petrologistics, a Geneva-based oil industry consultant, Iranian exports may amount to 1.9 million bpd in March, down from about 2.2 million bpd in February.

A source at an oil company, which still deals in Iranian crude, said the evidence pointed to an overall drop in shipments in March, seeing a decline of at least 300,000 bpd mainly because European customers are taking less.

European buyers of Iranian crude including France’s Total have already stopped buying the oil, which is subject to European Union sanctions from July 1. Royal Dutch Shell, is scaling back.

“We are taking less and less – very few barrels,” said an official with a European oil company, until earlier this year one of the larger EU buyers of Iranian crude.

TANKER TRACKING

A trading source at another European oil firm also estimated Iranian exports were falling from levels earlier in the year.

“I do see the month to date lower than February,” the source said. “I just don’t know where March will finish.”

Petrologistics is one of a number of companies which estimates oil output by tracking tanker shipments, because Iran, like many big oil exporters, does not routinely disclose how much it is supplying on a timely basis.

Iran’s oil exports are difficult to track and, like those of other countries, they can fluctuate week by week. With a week to go in March, it is possible the picture may change.

“We are struggling to get the numbers nailed down,” said an industry official.

Oil prices have climbed from around $107 a barrel at the end of 2011 as the tighter Western sanctions on Iran threaten to choke off its exports.

“There are definitely signs that buyers of Iranian crude are shy about buying and have been, in their search for replacement crude, bidding up the price,” said Edward Morse, global head of commodities research at Citigroup.

That means, as one industry official noted, that higher prices are compensating Iran for the loss of exports and that measures designed to punish it mean it now sells fewer barrels at higher prices.

Some oil industry officials say Saudi Arabia is increasing shipments to compensate for lower Iranian supplies and to lower prices, which may lead to Saudi output climbing above 10 million bpd.

Saudi Arabia said on Tuesday its March output was around 9.9 million bpd, its highest in decades.

An Iranian oil official, asked on Friday to comment on whether exports had fallen, referred to remarks earlier in March by Iranian Oil Minister Rostam Qasemi who said shipments were unchanged from last year.

 Reuters



8 Comments on "Iran oil exports fall as sanctions take toll"

  1. BillT on Sat, 24th Mar 2012 1:56 am 

    Reuters…propaganda mill for the stupid. They use a lot of “appears to” and “We are struggling to get the numbers nailed down” Bull Crap. They do not know. They are pushing propaganda.

    A 14% drop in shipments, if true, are not going to hurt Iran. The value of what they do ship will just go up, as will the gas at your local station.

  2. MikeK on Sat, 24th Mar 2012 4:21 am 

    So let’s see if my thinking is correct.

    If this story is true (just for the sake of argument) then, without sanctions, Iran could have sold 2.2 mbpd of oil at $107/barrel. Due to sanctions and the resultant increase in the price of oil, Iran is only selling 1.9 mbpd at $127/barrel. In essence, Iran is saving 300 kbpd of oil for future sales, and making approximately $6 million/day in extra revenue.

    Could someone inform me as to how this formula is supposed to bring Iran to its knees?

    It would also appear that if the U.S. imports approx. 8 mbpd, and is paying even the $7 increase that WTI has experienced on those imported barrels, this “pressure” on Iran is costing America approx. $56 million/day.

    Good luck with this.

  3. BillT on Sat, 24th Mar 2012 6:48 am 

    MikeK, don’t make the sheeple think. It hurts their brains and distracts from American Idol. Let them just suck up those 20 second propaganda bytes called ‘news’ in the Us.

  4. Arthur on Sat, 24th Mar 2012 10:48 am 

    Good for Iran: every barrel they do not sell now, they can sell later at much higher prices.

  5. Arthur on Sat, 24th Mar 2012 12:19 pm 

    Today in Holland highest prices for gas up another 5 cents: 1,85 euro/liter, no doubt connected to the stupid government decision of following US anti-Iranian sanction policies. Won’t be long until 2,00 will be passed. At a certain point they will stop responding with merely driving less and decide to dump the car altogether. The most stupid investment a European (or American) can do now is buying an oldskool 12 km/liter new car.

  6. BillT on Sat, 24th Mar 2012 2:20 pm 

    Arthur, most of the people who bought new cars during the ‘cash for clunkers’ deal you and I paid for, don’t realize that that is the last new car they will ever buy. By the time it is paid off, gas will have priced them right out of the driver’s seat and into public transit.

  7. Arthur on Sat, 24th Mar 2012 3:25 pm 

    Yeah, my nephew visited me the other day. He is 57 and retired a few years ago after selling his profitable car parts business. After 2 years he discovered that retiring at 55 sucks so now he told me he was happy that he started his business all over again, now with his son and that he had invested 200k euro in spare parts.

    Oh my God. I prudently brought up that fuel prices were going through the roof at the moment, which he reluctantly acknowledged. What to say at such occasions? I had a Peak-Oil aware collegue once whose wife had abandoned him over his incessant doom-talk. Poor western women, 1950-2010 was the best times to live for them, in terms of independence and wealth (read: Italian shoes) which enabled them to initiate divorce in 80% of the cases. It looks that all this is going to be reversed and a sort of muslim kind of life is waiting for them behind the horizon. Life is not going to be very comfortable for men either, but slightly less so, as they are going to be freed from assorted terrorists such as Gucci, Prada, Nike, BMW and Apple. No woman thought of divorce in the 1950s when men brought home the bacon and not much more.lol

  8. BillT on Sun, 25th Mar 2012 1:56 am 

    Arthur, you are so correct!