Iranian expert: four major factors can help Iran export oil

Oil&Gas Materials 30 April 2019 16:45 (UTC +04:00)

Baku, Azerbaijan, April 30

By Elnur Baghishov – Trend:

There are four major factors which will make the US sanctions imposed on Iranian oil products more difficult to execute than the sanctions imposed on crude oil, Iranian oil industry expert Hossein Asadi told Mehr News Agency, Trend reports.

According to Asadi, these are the diversity of oil markets, small volumes of cargo, low likelihood of the cargoes being tracked, and a variety of customers. These factors can help make Iran's exports of oil products much easier than its exports of crude oil.

The main problem with the crude oil export lies in the cargo volumes, as Iran can export up to 2 million barrels a day, the expert comments. "The large volumes of oil shipments allow the US to find and track them thus blocking Iran's ways of transporting crude oil," he noted.

The expert said that there are a total of 42 refineries around the world located in India, China, South Korea and other countries that accept Iranian crude oil for processing. The main bulk of the oil produced by Iran is exported from a specific location, namely the Kharg Island located in the Persian Gulf, and the only party putting oil up for sale at the global market is the International Affairs Office of the National Iranian Oil Company (NIOC).

"The fact that there is only one party putting oil up for sale, only one specific geographical location where the oil is sold, and – more importantly – that the number of customers is known makes it much easier to enforce the sanctions on the sale of Iranian oil. The US keeps a close watch on the oil refineries and imposes sanctions on them when they purchase Iranian crude oil," he continued.

However, it is possible to increase the number of customers by developing the oil refining industry and processing crude oil into various chemicals including fuel, oils, bitumen and polymers, says the expert. In his words, by processing crude oil and converting it into diverse oil products, Iran can export them to various destinations in small volumes.

The expert went on to say that, provided that the oil industry develops, oil products could be exported by local companies and the export of oil products would no longer be the monopoly of NIOC. As a result, imposing sanctions on the companies will become more difficult.

"At present, Iranian crude oil is transported to specific destinations in large tankers. Therefore, it is not so difficult to track them via GPS and satellite technology," he said. “It may be possible to arrange the transportation of oil products via heavy duty trucks and pipelines, and then to export them in various small vessels.” This, he believes, can make it harder for the US to track Iran's oil exports.

"The East Asian countries purchasing Iranian crude oil include India, China and South Korea. The rest are located in Southern Europe and Africa, geographically far from Iran," he said. In the meantime, by processing crude oil into various oil products, it can become easier to arrange the export to neighboring and closely located countries.

The US imposed sanctions on Iran in November 2018. The US exempted eight countries from oil sanctions imposed on Iran for six months. These countries continue to buy oil from Iran. The US announced that it will not extend the exemption period, which ends May 2, 2019.