November 22-2013
Iran’s oil exports plunged last month to their lowest since the Iran-Iraq war a quarter century ago.
Figures published by the Paris-based International Energy Agency (IEA) estimated Iran’s oil exports in October at just 715,000 barrels day.
However, that could just be an aberration. Iran’s exports in September were on the high side at 1,260,000 barrels a day. A giant tanker loading oil on the first day of the new month rather than the last day of the old month can make the month-to-month figures shift, but with no real meaning.
However, the IEA, which has cited tanker shifts as the likely cause of statistical shifts in some of its past monthly figures, did not mention that as a possible explanation for the October drop. Instead, it said, “Signs are emerging that the National Iranian Oil Company (NIOC) is finding it increasingly difficult to place barrels against the backdrop of sanctions.”
As evidence that Iran was having a problem selling, the IEA said about 300,000 barrels a day appears to have been placed in floating storage during October. It said that brought the total in floating storage to 37 million barrels or the equivalent of 14 days of production, a large volume to have in floating storage.
As further evidence of more problems marketing oil, the IEA cited press reports that Iran is offering potential buyers disguised discounts. It cited three types of discounts. India has reportedly been offered free delivery, which effectively slices a dollar off each barrel. Indian refiners have also been offered 90-day credit rather than the standard 30 days before bills must be paid. The third offer was a direct discount for increased volumes purchased. Over the years, Iran has always firmly denied reports that it has ever directly discounted the price.
The average for September and October was 988,000 barrels a day, very close to the 966,000-barrel average for the second half of 2013. It is that half-year figure that is most closely watched. The United States is pressing countries that still import Iranian crude to reduce the volume of their imports in each half-year period. Exports in the first half of 2013 averaged 1,089,000 barrels a day, according to the IEA, so the second half has thus far seen a reduction of 11 percent, bad news for the Islamic Republic.
The IEA’s figures for each of the five importers show that every one of them reduced its purchases substantially from September to October. That would suggest that the drop in sales is not just the result of one or two tankers delivering loads intended for October in September.
Here are the figures by buyer in thousands of barrels per day:
Sep Oct Change
China 475 300 -37%
India 300 165 -45%
Japan 250 100 -60%
S.Korea 135 65 -52%
Turkey 100 85 -15%
TOTAL 715 1260 -43%
For months the Indian government has been promoting an insurance scheme that would allow Indian refiners to buy Iranian oil with a special Indian re-insurance scheme replacing the European re-insurance no longer available because of sanctions. But despite much hype, the capital for that re-insurance scheme has not been provided by the government and private insurers so it has yet to get off the ground.
Turkey’s energy minister announced this month that Turkey would not abide by US demands to cut its purchases of Iranian oil. He said Turkey was buying 105,000 barrels a day of Iranian oil and would continue to do so despite US pressures. However, the table above shows that Turkey hasn’t been buying as much oil as the minister claimed.
