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Asia’s Jan-Apr Iran oil intake tops volume allowed by N-deal Tanker movements show Iranian exports rise again in May

TOKYO, May 30, (RTRS): Iran’s Asian buyers kept their oil imports from the OPEC member in the first four months of 2014 above the level allowed by the deal that eases some Western sanctions on Tehran in exchange for curbs to its nuclear programme. Under the deal signed in November and implemented in January, Iran agreed to curtail its uranium enrichment programme in return for the easing of some sanctions. As part of that agreement, Tehran is supposed to keep its exports at around 1 million barrels per day (bpd) for the six months to July 20. However, Iran’s biggest buyers - China, India, Japan and South Korea - together took in an average 1.24 million bpd of the Islamic republic’s crude between January and April, up nearly a third from the same period last year. Imports by the four have helped to keep Iran’s oil shipments above the deal’s cap since at least November.

The higher Iranian sales in late 2013 and early 2014 have led to some concerns in Washington that a softening of the sanctions has given Tehran’s economy a boost, but officials in the Obama administration have said they expect Iran’s oil sales to meet the target for the entire six-month period. “I don’t think the United States wants to be hawkish with Iran right now,” said Richard Gorry, managing director at JBC Energy Asia. “Iran doesn’t have that much more to export, so it’s not that this can go on indefinitely. They are limited by production issues. The bigger issue is that no one can invest in Iran’s upstream industry, and production is flat to falling,” he said. Since the agreement in Geneva last year, Tehran and six world powers have made little progress towards a breakthrough that would end for good the stand-off over the Middle Eastern nation’s disputed nuclear activities.

While the Asian import totals have dropped closer to the agreed amount the last two months, intake volumes that hit nearly 1.4 million bpd in February - not counting oil going to other destinations such as Turkey and Syria - mean the six-month export target is likely to be missed. Iran’s crude exports also seem to have rebounded in May back up to about 1.38 million bpd, according to sources who track tanker loadings. Those would be arriving in Asia mostly in June, just short of the deadline for Iran to have reduced its exports to 1 million bpd for the six month to July 20.

In April, Iran’s four main buyers imported 1.22 million bpd, up 6 percent from March and nearly twice that of a year ago, according to government and tanker-tracking data. Iran’s biggest oil customer, China, more than doubled its purchases in April from a year earlier to a record of nearly 800,000 bpd, while India’s imports from Iran surged last month more than 90 percent on-year to about 225,000 bpd - although this was less than in the first quarter of the year. South Korea imported 9 percent more than a year ago, or just over 135,000 bpd of Iranian crude for the month. Shipments to Japan - the last of the four to report its oil intake - gained more than seven-fold to 56,934 bpd last month, trade ministry data showed on Friday.

The six world powers want Iran to agree to scale back proliferation-prone nuclear activity and accept tougher U.N. inspections to deny it any capability of quickly producing atomic bombs, in exchange for an end to economic sanctions. Tehran says its nuclear programme is aimed at generating electricity, not making weapons. The next round of talks between the world group - made up of the United States, Russia, China, Britain, France and Germany - and Iran will be held in Vienna from June 16 to 20, the European Union said on Tuesday. The United States and the European Union toughened sanctions on Tehran in early 2012 in an effort to force it to end its nuclear programme, slashing the Islamic republic’s oil exports by more than half and costing it billions a month in revenue.

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