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Iran Oil Exports Spike as Fresh Sanctions Expected | ASHARQ AL-AWSAT English Archive 2005 -2017
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London, Asharq Al-Awsat-Reports on Thursday claimed that Iran’s oil exports in December rose to their highest levels since EU sanctions took effect last July, largely as a result of Chinese demand.

This comes amid severe international sanctions that have been enacted against the Tehran regime, with a fresh round of US sanctions scheduled to come into effect next month.

Two industry experts quoted by Reuters claimed that Iran’s exports of crude oil leapt to 1.4 million bpd (barrels per day) in December, adding that experts forecast that exports were expected to remain between 1.1 million and 1.3 million bpd in the first quarter of 2013.

Bloomberg put Iran’s December oil exports at closer to 2.66 million bpd.

Talking to Asharq Al-Awsat, Afshin Molavi, Senior Advisor at Oxford Analytica, said “It is a measure of how far Iran has fallen that the world is surprised at Iran exporting 1.4 million bpd and somehow sees it as a ‘victory’ for Iran and a ‘defeat’ of sanctions.” He added, “In 2011, Iran exported on average 2.5 million bpd. In 2010, it exported 2.6 million bpd. For Iran to export 1.4 million bpd should not be viewed as a ‘victory.’ It is a reflection of how far Iran’s exports are being hurt in light of sanctions.” The Reuters report claimed that “continuous robust demand from top buyer China”, in addition to India and Japan, had allowed the Islamic Republic to unexpectedly boost its exports late last year.

The report also cited Iran’s purchase of new oil tankers.

Following western sanctions aimed at curbing Tehran’s disputed nuclear program, Iranian oil exports decreased by a reported 50 percent in 2012. According to the Joint Organizations Data Initiative, Iran shipped a mere 1.88 million bpd in May 2012, representing the lowest export of oil since April 2002. Other estimates claim that the nadir of Iran’s oil exports came in September, with just 900,000 bpd being shipped abroad.

Molavi told Asharq Al-Awsat, “Current sanctions are not intended to cut Iran off entirely from world oil markets. They are intended to squeeze Iran’s oil exports. It is not a choke hold, but a squeeze.” From 6 February, a new round of US sanctions will prevent Iran from repatriating earnings from its shrinking oil export trade. This represents an escalatory measure that US officials claim will “lock up” a substantial amount of Tehran’s funds.

US State Department spokesman, John Finn, said, “We continue to engage in close consultations with our international partners on US sanctions with the objective of maintaining pressure on Iran to comply with its international obligations.” He added, “Month-to-month variability in crude oil purchases is not unusual.” The Brent oil price edged higher on Thursday, briefly recording a 3-month high, as the market weighed mixed economic date from the US and Europe. The international benchmark rose to $115.25 a barrel, the highest level since October.

In this regard, Molavi emphasized that “high oil prices have cushioned the blow for Iran of reduced exports, but the opportunity cost of lost revenue for a country that could conceivably export 2.5 million bpd is high.” He added, “Absent sanctions, Iran’s oil industry could also produce a lot more oil, freeing up more for sales. The question, therefore, is not only a matter of what Iran loses today. It is what Iran is losing tomorrow as a result of sanctions. The opportunity cost and future losses are high.”