Iranian oil exports will slide in May as the United States tightens the screws on Tehran’s main source of income, industry sources said, deepening global supply losses caused by US sanctions on Venezuela and OPEC-led cuts.
The United States reimposed sanctions on Iran in November after pulling out of a 2015 nuclear accord between Tehran and six world powers. Those sanctions have already more than halved Iranian oil exports to 1 million barrels per day (bpd) or less.
Washington, aiming to cut Iran’s sales to zero, said all sanctions waivers for those importing Iranian oil would end this week. Iran says this will not happen, although its officials are bracing for a drop in supplies.
Reuters quoted one Iranian official familiar with oil policy as saying that exports could drop to 700,000 bpd and as low as 500,000 bpd from May onwards. An OPEC source said Iranian exports would likely continue at about 400,000 to 600,000 bpd.
Iran would likely be able to maintain some shipments for debt repayment to China and India, and into storage in China, and smuggle a limited extra amount as it did under previous sanctions, analyst Sara Vakhshouri said.
“It’s important to note that zero oil sales in May doesn’t mean that there will not be oil deliveries to China or India in the month,” she said.
“In total, Iran could export between 200,000 to 550,000 of oil. of which not all is sold oil.”
Analysts at Energy Aspects expect a drop in Iranian shipments to around 600,000 bpd from May onwards.
Iranian exports have become more opaque since US sanctions returned in November. Tehran no longer reports its production figures to the Organization of the Petroleum Exporting Countries and there is no definitive information on exports.
Some of Iran’s oil exports are already under the radar, making it harder to assess the actual volume.
The OPEC member exported between 1.02 million bpd and 1.30 million bpd of crude and condensate in April, Refinitiv Eikon and Kpler, a company that tracks oil flows, estimate.
The dearth of information is a headache for other OPEC members and allies, which meet to set oil supply policy in June. OPEC canceled an April meeting, partly due to this uncertainty.
