Iran in Crisis after Oil Exports Expect to Vanish Almost Half by Year-End

For months that the United States has asked buyers of Iranian oil to cut imports to zero starting in November to force Tehran to negotiate a new nuclear agreement and to curb its influence in the Middle East.

While it appears to be strong, the data on oil exports does not keep up with what the government has said. According to the people familiar with purchasing plan, Iran expects crude exports to fall by a third in September and potentially posing an unforeseen supply risk to markets. Officials at the state-run National Iranian Oil Co. provisionally expect crude shipments to drop to about 1.5 million barrels per day next month, down from about 2.3 million barrels per day in June.

The National Iranian Oil Co has slashed its crude prices to keep buyer interest amid the August export drop. It has set the official selling price (OSP) for Iranian Heavy crude for September loading at the biggest discount since 2004.

 

China has switched to using Iranian tankers to deliver the country’s crude since July to side-step the sanctions and sustain Iranian oil imports until at least October. However, the loadings bound for top customer China are set to fall to 18.4 million barrels in August, from 24 million barrels in July which was its highest monthly volume this year. Meanwhile, the oil to other countries such as India, Japan and Eurozone are also decreased more or less.

Experts had expected oil shipments to decline by about 1 million barrels by year’s end. Now some of them say that fall may have already happened as Iran has not yet announced its exports this month the forecast for next month.