TOKYO: Asia’s top buyers of Iranian crude have cut purchases by about 14 percent so far this year, but imports may edge higher in coming months, as growing unrest in Africa threatens to tighten global oil supplies.
Tough U.S. and EU sanctions have slashed exports from the OPEC member by more than half to about 1 million barrels per day, costing it as much as $80 billion in lost revenue since early 2012, according to White House estimates.
However, a breakthrough agreement last month between world powers and Tehran over its disputed nuclear program may offer Asian importers a slight reprieve from conflicts in South Sudan and Libya, which have pushed Brent futures back toward three-month highs.
Although the Geneva deal doesn’t allow Iran to boost oil sales for six months, buyers who sharply reduced purchases earlier in the year have room to raise imports. India tops the list, for making the steepest cuts, followed by South Korea. China and Japan have the least scope as they have struggled to lower shipments this year.
The deal, with the United States and five other global powers, known as the P5+1, agreed to a pause in efforts to reduce Iran’s crude sales, allowing consumers to continue buying their “current average amounts of crude oil.”
It also exempts buyers of Iranian oil, most of whom are based in Asia, from continually reducing purchases to earn a six-month waiver granted by the United States from sanctions.
The U.S. State Department extended a six-month Iranian sanctions’ waiver at the end of November to China, India, South Korea and other countries as a reward for them reducing purchases of Iranian crude oil earlier this year.
Imports by Iran’s largest customers – China, India, Japan and South Korea – fell to 928,529 bpd in the first 11 months of the year, down from 1.08 million bpd in the same period a year ago, according to official customs reports and tanker data from trade sources.
Shipments in November by the four totaled 968,946 bpd, down 5.6 percent from 1.03 million bpd a year ago.
India has cut imports by 38.5 percent so far this year to 196,200 bpd.
Iran’s biggest customer China imported 538,513 bpd of Iranian crude in November, the second-highest this year. In the first 11 months, China’s purchases from Iran were down only 0.6 percent at 421,520 bpd.
Japan, which has also struggled to cut its Iranian crude purchases this year after lowering them by 40 percent in 2012, slashed imports to 82,300 bpd in November, down more than half on a year earlier, the country’s trade ministry said Friday.
Japan’s imports of Iranian oil during the 11 months through November were down 4.6 percent at 178,539 bpd, the data showed.
South Korea’s imports of Iran oil fell 12.1 percent to 132,270 bpd between January and November.
The United States believes the economic impact on Iran of U.S. and European Union sanctions forced Tehran to the negotiating table.
The pair believe Iran is developing nuclear weapons, while Iran says its program is for power generation. Washington has stressed that Tehran has to take concrete steps within six months for any further relaxation of sanctions.
If the Islamic Republic is caught making bombs after last month’s deal, the United States and its allies will have ways to reimpose sanctions on Iran, national security adviser Susan Rice said Sunday.