Renewed US sanctions would halve Iran’s oil export in mid-term

On May 8, the US President Donald Trump put an end to Washington’s commitments under the nuclear deal walking away from the Joint Comprehensive Plan of Action (JCPOA), reached in 2015 between Tehran and the six world powers. Trump also announced that the US re-imposes the "highest level of economic sanctions" on the Islamic Republic, including the sanctions against the country’s oil sector.

Mehrdad Emadi, an economic expert and consultant at the UK-based Betamatrix International Consultancy, believes that the re-imposition of the US sanctions against Tehran will not cut the country’s oil export to below the pre-nuclear deal period in short term, but in medium term it can seriously impact Tehran’s oil sale.

"In the short to medium term, I do not envisage a fall in Iranian exports to below one million barrels a day. However, in medium term, with the economic slowdown in Turkey and China, it is conceivable that Iran’s exports could decline to 1.2 -1.4 million barrels a day," Emadi told Trend May 10.

Before it got hit with sanctions in 2012, Iran was exporting 2.5 mb/d of crude oil and gas condensate, of which 18 percent was supplied to the EU. After 2012, the EU cut Iran oil purchase and Asian countries had to decrease Iranian oil import gradually, which led to a drop in export of Iranian oil and gas condensate to 1.2 mb/d in 2015. After elimination of sanctions in 2016, based on nuclear agreement, Iran resumed its oil exports and increased it to over 2.8 mb/d in April.

"Reintroduction of sanctions will not stop Iran from selling its oil, but at the same time it will reduce the presence of Iran in international oil markets," according to Emadi. "To explain this dichotomy, Iran’s main buyers - China and India - are locked into long term contracts which allow them to pay in their national currencies, yuan and rupee. But given the fact that neither currency is as convertible as the US dollar and the euro, effectively Iran ends up being forced into spending the yuan on Chinese goods and the rupees on Indian goods," the expert noted

He further remarked that similar arrangements also have been agreed on with Turkey in the last six months.

"Yet in my view this is not a meaningful presence in the international oil market, where exporters compete to get the best deal for their crude. None of these three countries will be prepared to fully comply with US demands; however, the more significant part of Iranian exports is where Iran earns hard currency from the sale of its crude."


Masaim Abdullayev,

“Khalq qazeti”

 


© İstifadə edilərkən "Xalq qəzeti"nə istinad olunmalıdır.



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