Iranian Oil Exports Continue to Fall in Anticipation of U.S. Sanctions
Exports of Iranian crude oil fell to their lowest level in four months in July according to S&P Global Platts. The reason for this is the first set of U.S. sanctions kicking in.
In May, U.S. President Donald Trump announced that he was pulling the United States out of the 2015 Iran nuclear deal. He explained that the main purpose of the deal – to curb the Iranian Regime’s nuclear activity – was not being met and that the deal was in fact guaranteeing a nuclear arms race in the region.
Not long after this announcement, the U.S. State Department said that it expects all foreign countries to reduce their imports of Iranian oil to zero. At first it was adamant that no waivers would be granted, but slightly softened its stance by saying that some allies would be dealt with on a case to case basis. However, the Trump administration insisted that its pressure campaign on Iran would not change.
The fall in Iranian oil exports is likely almost certainly due to the sanctions that were reapplied at the beginning of the month. Main buyers are starting to reduce their purchases of Iranian oil in compliance with the Trump administration’s demands.
It is believed that the export quantities on Aframaxes, Suezmaxes and VLCCs dropped from 2.49 million barrels per day to 2.32 million barrels per day in June, representing a fall of 7 per cent.
The Iranian Regime’s exports of oil to India and China were high, but this is to be expected as they are the country’s two main buyers, however there was a sharp decrease in exports to Europe and South Korea who are beginning to source oil in other countries.
After a decrease of oil exports for the past three months, it is expected that they will continue to fall in the next few months too. Perhaps even more sharply. The second batch of U.S. sanctions – the ones that affect the oil industry – are due to take effect at the beginning of November. The sanctions are going to severely restrict the flow of oil and will affect all transactions with Iran and the oil tanker insurance. This will be very off-putting to many who will look for oil elsewhere.
The Iranian Regime will face great difficulty in selling its oil and this is exactly what the Trump administration wants. It has explained that it is trying to cut the Iranian regime off from the revenues that it uses to fund terrorist activities across the region.
As the economic crisis in Iran worsens, the people are continuing to take to the streets to protest against the clerical regime’s rule. They know that the regime is incapable of reform and they are demanding regime change as it is the only way that will guarantee them freedom, democracy and the respect of human rights.
The U.S. administration has voiced its support for the people of Iran but the Europeans have been reluctant to get involved. Perhaps it is only a matter of time before it realises that it cannot remain silent any longer.