Iran’s Oil Exports Drop Ahead Of U.S. Waivers Decision

While Iranian customers have started negotiations with the U.S. on possible waiver extensions to continue buying oil from Tehran, Iran’s oil exports so far in March are down from January and February to average around 1 million bpd-1.1 million bpd, Reuters reported on Thursday, citing industry sources and ship-tracking data.

This compares to around 1.3 million bpd estimated Iranian exports for February.

The U.S. waivers for eight key Iranian oil customers, including China, India, Japan, and South Korea, expire in early May. While the U.S. Administration says that it continues to pursue zero Iranian oil exports, analysts expect Washington to extend waivers to at least a few of the currently exempted buyers, with reduced volumes allowed under the new waivers, as the Administration wouldn’t want to push oil prices too high.

In January and February this year, Iranian crude oil exports were higher than expected, as several of Iran’s customers were using up their U.S. sanction waivers to continue importing Iranian oil, according to industry sources and shipping data, quoted by Reuters 10 days before the end of February.

According to tanker-tracking data from Refinitiv Eikon and a source at a company tracking Iranian oil flows, Iran’s exports in February averaged 1.25 million bpd, while the January exports were between 1.1 million bpd and 1.3 million bpd, higher than the previously expected below 1-million-bpd level, which was seen in December.

While tracking Iran’s oil exports has become an increasingly difficult task after the U.S. sanctions returned in early November, some of the key Iranian oil customers that received U.S. waivers resumed Iranian oil purchases in 2019 or increased imports to their respective ceiling allowed under the waivers, after an initial ‘wait-and-see mode’ for November and December purchases amid uncertainties who is getting waivers.

As the ‘waivers window’ will be shrinking as we approach early May, buyers may be rushing to buy what they can before April in order to be able to complete transactions before May in case waivers are not extended, according to analysts.

Japanese refiners, for example, are unlikely to continue buying Iranian crude from April onwards, the president of the Petroleum Association of Japan, Takashi Tsukuoka, said earlier this week, as quoted by Reuters.

However, Tsukuoka added that refiners would continue importing Iranian crude if Tokyo agreed on a sanction waiver extension, which it was currently negotiating with Washington.

By Tsvetana Paraskova for Oilprice.com