Asia to deepen Iran oil cuts as sanctions ‘bite’ Turkey’s import of Iranian oil steady in January

SINGAPORE/TOKYO, Feb 1, (RTRS): Iran’s crude exports to its biggest customer, Asia, fell by a quarter in 2012 and shipments this year are expected to drop by at least 12 percent under US sanctions pressure, but ample alternative supplies will keep refiners flush with oil.
Asia’s main oil buyers cut imports from Iran to an average of 1.09 million barrels per day in 2012, government and industry data shows, and planned cuts in term contracts for 2013 point to further reductions of at least 135,000 bpd.

However, experts say overall cuts would have to be deeper to secure further waivers from the US sanctions that are aimed at forcing Iran to halt its nuclear programme and which have made shipping and paying for Iranian oil difficult, cutting overall exports by more than half in 2012.
From Asia, Iran lost $14 billion worth of oil exports for the year, according to Reuters calculations. Exports will remain under pressure this year as well as the United States lobbies Asian countries to further reduce purchases, even though Iranian exports last month rose to their highest since the EU imposed sanctions in July.
An abundance of alternative supplies, mainly from the Middle East, of oil that is of similar quality to what Iran exports and stable prices mean Asian buyers will be able to easily make up for the loss in shipments from Iran.

“Thanks to the efforts of Saudi Arabia, growth of production in Iraq and the United States, I do not expect any major difficulty in terms of meeting global oil demand this year,” said Fatih Birol, chief economist at the International Energy Agency which advises industrialised nations on energy policies.
The drop in Iranian exports “will not affect the market in a negative sense”, he told reporters in Tokyo.
Almost all of Iran’s exports flow to Asia.
Most Asian refiners have so far been unaffected by the lack of Iranian oil as they have complex processing facilities that allow them to switch from one type of crude to another. Only Sri Lanka was forced to shut its sole Iran oil-specific refinery.
A further reduction in Iranian exports may drive up costs if more and more buyers go after the same alternative crude, but that scenario is so far unlikely because of plentiful supplies.
The top beneficiaries of Iran’s reduced exports last year were Saudi Arabia, Angola, Iraq, Venezuela and Russia as these countries ramped up shipments to plug the shortfall from Iran.

Turkish imports of Iranian crude oil held steady in January at around 100,000 barrels per day (bpd), according to market sources and Reuters AIS Live ship tracking. Turkey’s sole refiner Tupras took two 140,000-tonne cargoes of Iranian crude oil to the port of Tutunciftlik and a 150,000-tonne cargo to the port of Aliaga, a shipping source said. Ship tracking showed the same information. Imports of Iranian crude oil have been around 100,000 bpd since September, according to the same data. The volume is around half of what Turkey used to import from Iran. Imports peaked at around 250,000-280,000 bpd in early 2012 but were then reduced in the run up to the imposition of a European Union oil embargo on July 1 and tightening of US financial sanctions on Iran over its disputed nuclear programme. Turkey was granted an initial waiver on Iranian oil by the United States for 180 days from June 11 after Ankara made an initial 20 percent import cut before sanctions came into effect. The exemption was renewed in early December for another 180 days.

Western nations have imposed a raft of sanctions on Iran aimed at hampering its finances to prevent the country from developing an atomic bomb, while Tehran says its nuclear activities are peaceful.
Turkey has been using Iranian oil tankers owned by Iran’s NITC since July as the EU sanctions also target marine insurance, which effectively cut off the usual avenues for tanker insurance for Iran’s remaining buyers. China, Japan, South Korea and India are the main buyers, along with Turkey, out of the 20 countries with waivers. Iranian crude oil exports rose to around 1.4 million barrels per day (bpd) in December, their highest level since the EU sanctions took effect last July, according to data compiled by Reuters on a country-by-country basis and corroborated by other sources and consultants. The sources said they expected exports to dip in January from the December peak ahead of new US sanctions set to come into force on Feb 6.

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