Russian, Iraqi crude - a big threat to Iran's oil exports

Russian, Iraqi crude - a big threat to Iran's oil exports

By Dalga Khatinoglu

After the "Geneva agreement" on Iran's nuclear program, speculations about reviving Iran's halved crude oil export to international markets have risen.

The Middle East country's crude oil export decreased from 2.2 million barrels per day to below one mbpd since 2011, while condensate export dropped by 34 percent to about 200 tbpd during the mentioned period.

The latest report published by Iran's Custom Administration says the country's condensate export soared to 345 tmbd during last Iranian calendar month (Oct.21 to Nov.22), even more than pre-sanctions' level, but what about crude oil? First of all, let's review what mechanisms were used by Iran toward the West's sanctions, aimed at chocking up the country's oil exports.

Iran was unable to boost refinery capacity, so it was forced to start closing down some oil wells as well as storing crude oil in tankers. Reportedly, Iran holds 25 to 30 million barrels of unsold oil storage in tankers, potentially is able to be supplied whenever other restrictions be eliminated.

Iran also is able to re-open closed oil wells in 3 to 6 months and boost oil output by 0.8-1 mbpd from current level which is about 2.6 mpbd based on IEA and OPEC's estimations.


Potential doesn't equal reality

International Energy Agency and OPEC, as the representatives of energy importers and suppliers respectively, both predicted that the international demands for oil in 2014 would rise by about one mbpd, but not from which of OPEC members produce.

The OPEC's current oil output ceiling is about 30 mbpd, while Libya's producing 30 percent of its real capacity and Iraq's oil output decreased by about 0.2 mbpd in October compared to August due to temporary disruptions. However, OPEC says the demand for OPEC crude would decrease from current 29.9 mbpd to 29.6 mbpd next year.

Of course, the U.S. - thanks to the technology of producing oil and gas locked in shale rock - is going to boost their oil output significantly. It's predicted the U.S. would overtake the Saudi Arabia's output level until 2015, but regarding to American shale oil's type which is sweet and light, it is not a serious direct rival for Iranian heavy and mostly medium oil (in the 28° to 35° API gravity range) in international markets.

Today, 164th OPEC petroleum ministers gathered in Vienna to discuss the cartel's output, but considering the instability in Iraq and Libya, and also significant lack between ceiling level and the current supply, it is predicted that the ceiling level will not be changed.

Iraq and Russian oil factor


It seems - in case the oil export-related sanctions over Tehran are eliminated this month - Iran would face some major obstacles to re-opening its closed oil wells.

The first one is Iran's stored oil in tankers and decrease of markets' demand to OPEC oil. With keeping the current output level and considering the fact that the West eased some restrictive financial measures on Iran, but had not eliminated sanctions on the country's oil export, Iran actually will be unable to re-open any oil wells until the third quarter of 2014 and boost production level, or even early 2015 regarding unsold oil amount in tankers.
IEA says that within several years the demand for OPEC's crude will increase, and Iraq with an oil type so close to Iran's crude type in term of API gravity.

Iraq has aimed at having a daily12-million barrel production level 2017. This figure seems ambitious - especially due to ongoing instability and lack of security inside the country- but regarding huge contracts with international giant oil companies, Iraq certainly will be able to significantly raise crude production.

The other oil, close to Iran's in quality is Russian Ural crude, with API gravity of about 31.3 and containing about 1.25 percent of sulphur, the best possible replacement for Iranian oil. Russia's Ural crude has already compensated for the cut Iranian oil flow to European refineries since mid-2012.

Urals blend accounts for more than 80 percent of Russia's exports and is a mixture of mostly Russian crude varieties, according to the Energy Information Administration's latest report.

The situation became worse for Iran when Russian Energy Ministry announced on Dec.2 that increased production at Rosneft and foreign-led projects sent overall Russian oil output, the world's largest, to a post-Soviet record high of 10.61 million barrels per day in November 2013.

Dalga Khatinoglu is head of Persian News Service of Trend Agency

Baku entitled to demand compensation from Armenia – Russian political analyst
Baku entitled to demand compensation from Armenia – Russian political analyst
Karabakh suffered from Armenian occupation for nearly 3 decades - Turkish MP
Karabakh suffered from Armenian occupation for nearly 3 decades - Turkish MP
Important to observe int’l law to avoid such conflicts as Karabakh one in future - Chancellor of Germany
Important to observe int’l law to avoid such conflicts as Karabakh one in future - Chancellor of Germany
Loading Bars
Latest
E-auction for right to explore and produce hydrocarbons wraps up in Kazakhstan
Azerbaijan eyes to expand pomegranate export in 2021
Very ambitious reforms carried out in energy sector of Georgia - deputy minister
Azerbaijan, Hungary agree to cooperate in developing e-government
Uzbekistan remains largest importer of Kazakh wheat
United Airlines gets summer ready; to add over 480 flights to U.S. schedule
Israel's Health Ministry warns against travel to seven countries
Ambassador of Georgia to Ukraine returns to his duties
Georgia's import of tubes, pipes, hollow profiles from Turkey decreases
Georgia's Geostat reveals volume of ferroalloys exported to Turkey
Azerbaijan, Turkey to exchange experience on capital markets dev't
Georgia sees increase in volume of new mortgages - TBC Capital
Port of Baku may be transferred to private management - Director-General
Turkey reveals volume of cargo shipped through ports since early 2021
Kazakhstan suspends trade, economic co-op agreement with Croatia
Georgia can become one of 25 largest blueberry exporters in world
Public sector of Turkmenistan increases production volumes
Kazakhstan reveals physical volume of GDP for 2020
Azerbaijan announces date for export of domestic cars to Ukraine
Georgia's imports of medical products from Turkey down
Turkmenistan to participate in implementation of container line between Russia, Iran
Azerbaijan publishes data on number of vaccinated citizens for Apr. 23
Azerbaijani president appoints temporary Health Minister
IFC to provide assistance to Georgia in field of investment
Georgia sees increase in import of vehicles from Turkey
TAP implementing €800,000 worth program to reduce marine litter
Georgian exports of knitwear to Turkey up
Nar launches “Reading hour” Project for schoolchildren
Total volume of bank deposits of Azerbaijani population slightly decreases
Azerbaijan confirms 1,809 more COVID-19 cases, 2,191 recoveries
Georgia joins European Union's Eurodesk network
AmEx profit beats on over $1 bln reserve release boost
Azerbaijani president signs decree on dismissal of Health Minister
Azerbaijan publishes 1Q2021 data on gas exports to Italy
Businesses in Georgia to begin recovery in 2H2021 - Banking Association of Georgia
Lending to public organizations in Azerbaijan drops
Uzbekistan considers co-op with Caspian states as priority direction of foreign policy strategy
Azerbaijan cooperates with leading countries in robotics development - ministry
CNPC subsidiary opens tender in Turkmenistan for purchase of electrical materials
Deutsche Bank supports its Kazakhstan-based partner banks amid COVID-19 crisis
Turkey’s support of Georgia’s integration into NATO - crucial - Georgian FM
Azerbaijan shares data on bank deposits in foreign currency
Uzbekistan, US talk strategic partnership prospects
Panasonic to buy U.S. supply-chain software firm Blue Yonder for $7.1 bln
Iran's TPO expects trade growth
Germany’s biased attempt to undermine Azerbaijan - blatant hypocrisy - Azerbaijani political analyst
Kazakhstan-Romania trade plummets
Georgia sees surge in labor market
China-Europe Rail Transit Corridor to pass through Iran - RAI
Bank of Russia increases key rate to 5% per annum
N. Macedonia soon to ink deal for pipeline to get Azerbaijani gas
Azerbaijan sees annual decrease in deposits of local banks
Azerbaijan shares data on cotton sown area
Turkmenistan's Turkmenstandartlary opens tender for purchase of testing gas meters samples
SOCAR buys 3 oil tankers from Greek maritime corporation - sources
Iran's Mercantile Exchange to offer cars for sale
Azerbaijan's ASCO to engage tanker insurance services via tender
More joint border crossings could boost Iran-Pakistan trade ties - Chamber of Commerce
Iran's exports to Africa down
Azerbaijan hopes US Administration will not make historical mistake - Assistant to president
Iran's priority to provide COVID-19 vaccine from abroad than wait for domestic one - official
Turkey’s export of chemicals to US surges
Uzbek-Korean JV opens tender for compressors spares
Cargo turnover at Turkish Antalya Airport declines for 1Q2021
Students of Baku Higher Oil School become winners of ‘Enactus Azerbaijan Spring School’ project
Turkey discloses number of companies with Uzbek capital since early 2021
Iran receives new batch of Russian 'Sputnik V' COVID-19 vaccine
Azerbaijani IT company expands its range of solutions through int'l co-op
SpaceX rocketship launches 4 astronauts on NASA mission to space station
Turkey discloses number of Gemlik port-received ships in 2M2021
Decrease in bank lending observed in Baku and Azerbaijani districts
France should abandon OSCE MG co-chairmanship - French Senate member
Turkmenistan, Kazakhstan discuss issuing visas to drivers
TCO unveils timeframe plans for annual maintenance turnaround at Kazakhstan’s Tengiz
Azerbaijan discloses national team at Rhythmic Gymnastics World Cup
Defeat in Second Karabakh War - hard psychological point for Armenia, says Russian analyst
Germany ready to take part in gas production expansion projects in Kazakhstan
Uzbekistan's gold and foreign exchange reserves keep declining
Share of non-budgetary organizations in compulsory social insurance receipts increases in Azerbaijan
TOP-10 importers of Azerbaijani oil in 1Q2021
Uzbekistan’s volume of received cross-border transfers increases
Georgian reveals volume of funds spent on utility bill subsidy
Georgia, Ukraine to issue electronic permits for int'l cargo transport
Kazakhstan decreases production of raw sulfur over 1Q2021
Uzbekistan eyes exporting fresh and dried fruit, vegetable products to Latvia
Georgia increases imports of cars from Turkey
International Forum on Attracting Investment in Oil, Gas Industry of Turkmenistan select sponsor
JOCAP details plans for platform around Oil Rocks
Russia records another 8,840 coronavirus cases
JOCAP updates on progress in operations of PLBH for Absheron project
Turkey reduces exports of grain, legumes to Turkmenistan
Azerbaijan's State Committee on Property Issues to hold auction for state properties
Kazakh gas producing company opens tender for hydraulic fracturing services
YARAT Contemporary Art Space presents major project - 1st edition of Baku Street Photography Festival
Georgia reports 1,271 new cases of coronavirus for April 23
Purchasing power of Azerbaijani Nakhchivan's population improves for 1Q2021
Options for diversifying sources for Southern Gas Corridor
Uzbekistan reveals share of agricultural, forestry, fish output for 1Q2021
Georgian Railway increases cargo transportation
Armenia's PM interested in continuing co-op with Soros Foundation - expert
All news