Iran Taps Old Oil Customers as It Eyes End of U.S. Sanctions

Iran is reaching out to old customers in Asia to gauge their interest in buying its oil as Tehran ramps up diplomacy to get U.S. sanctions lifted.

The National Iranian Oil Co. -- the state oil marketer -- has approached at least five refiners across the region to discuss the possibility of supply deals if sanctions are eased, according to people familiar with the matter. Talks are preliminary, with no discussion on volumes or prices yet, they said, asking not to be identified because the information is confidential.

One processor has been contacted twice this year after having no interaction with the OPEC producer at all in 2020, according to one person. The Iranian oil ministry declined to comment on the matter.

Iran Taps Old Oil Customers as It Eyes End of U.S. Sanctions

Iran’s crude shipments dwindled to a trickle after reaching around 2.5 million barrels a day in early 2018 as former U.S. President Donald Trump tightened sanctions and ended waivers for some countries in 2019. Still, a number of Chinese refiners continued to take some oil. Prior to the penalties -- put in place to pressure Tehran into renegotiating a nuclear deal -- China and India were Iran’s biggest buyers in Asia, followed by South Korea and Japan.

“I expect most buyers in Asia to say they would be happy to resume importing crude, provided U.S. sanctions are lifted,” said Vandana Hari, founder of Vanda Insights in Singapore. “Iran is probably hopeful and impatient to get its oil back into the market, but the diplomatic road to that seems like a long and difficult one.”

Oil’s Wildcard

Citigroup Inc. has described Iran as the biggest wildcard for the oil market this year, although there’s no certainty a deal with the U.S. will materialize anytime soon that would lead to higher exports. President Joe Biden has offered to participate in talks to revive the nuclear accord, but Tehran wants U.S. sanctions to be lifted first. Europe said recently it will be more active in trying to revive the pact.

While Iranian oil exports are still subject to sanctions, shipments have been creeping up and flows to China have received some unwanted attention. India is also hoping Biden takes a softer line against Iran so that the world’s third-largest oil importer can diversify its crude sources.

Beijing opposed the sanctions and accused the U.S. of reaching beyond its jurisdiction. Washington claims Iran disguises the origin of its crude to skirt the sanctions and the Department of Justice recently seized 2 million barrels of crude aboard a Greek tanker, saying the owner was deceived into thinking the oil came from Iraq.

©2021 Bloomberg L.P.

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