Baku, Azerbaijan, Nov.30
By Leman Zeynalova – Trend:
Iran’s oil output is expected to drop by around 400,000 barrels per day by 2020 under the US sanctions, the US JP Morgan Bank said.
“Taking into account the commencement of US sanctions on November 4, we model production reducing by around 400,000 barrels per day (from 3.8 million barrels per day in 2018 to 3.4 million barrels per day in 2020). This is in line with our Manaar call feedback report in June, where we highlighted the actual production impact of an embargo is likely to be nearer to 500,000 barrels per day,” said a report from the Bank.
Total Iran oil exports are trending at around 2.5 million barrels per day, with China and India its key customers, according to the report.
Manaar categorizes three market tiers for Iran’s oil exports, as follows: (1) Asia – led by three key countries in China (around 650,000 b/d), India (more than 500,000 b/d) and South Korea (around 300,000 b/d), plus Turkey (around 175,000 b/d); (2) Europe – around 600,000 b/d, primarily southern Europe through Italy, Spain and Greece, plus France; and (3) Regional GCC demand – most notably UAE at approaching 150,000 b/d.
In Manaar’s view, India in particular has scope to absorb additional supply in the event near-term production moves higher. While Manaar sees no evidence to date of any major (global) consensus to boycott Iranian oil, active discussions are understood to be ongoing with Europe, GCC and India.
US President Donald Trump declared Washington’s withdrawal from the nuclear deal with Iran in May 2018. Trump also announced the restoration of all sanctions against Iran, including secondary ones against other countries doing business with Iran. The United States re-introduced part of the sanctions against Iran on August 7, while the second batch of the sanctions came into effect on Nov.5.
The US government has agreed to let eight countries, including South Korea and Japan, as well as India, keep buying Iranian oil after it reimposes sanctions on Tehran. The waivers have been granted for six months.
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