Iranian oil exports hit one-year high

The Wall Street Journal

TEHRAN—Iran's oil exports have bounced along at one-year highs over the past two months, a top energy agency said Friday, amid a thaw in relations with the West that is already showing signs of boosting the Islamic Republic's battered economy.

The boost in oil exports—if it continues—threatens to exceed a cap on exports Iran agreed to as part of an interim deal over its nuclear program. The deal between Iran and six global powers requires that Iran's shipments don't average more than one million barrels a day of crude over the six months of the agreement, which started Jan. 20.

The excess output is relatively small for an oil-trading market in which volumes can rise or fall significantly month-to-month because of anything from weather and maintenance to geopolitics. Still, it underscores increasing appetite for Iranian crude from some of the global customers allowed to buy it.

U.S. and European sanctions have all but prohibited sales of Iranian crude in those markets. But Asian buyers have continued to buy crude from the Islamic Republic. Amid a tightening of global sanctions over the last two years, financing and insurance have been more difficult to get for these buyers. Many Asian buyers have also voluntarily throttled back on Iranian crude purchases, under pressure from Washington and Brussels.

Some of that pressure has lifted after a deal between Tehran and the West that has eased some economic sanctions. Washington and Brussels haven't eased sanctions on crude, but Asian oil buyers are getting more comfortable buying Iranian oil because of decreased political risks, oil officials and foreign traders in Tehran say.

A file picture shows Iranian Revolutionary Guards driving a speedboat in front of an oil tanker in 2012. Agence France-Presse/Getty Images

Data from the International Energy Agency released Friday suggests that is translating into more Iranian crude sales. In its monthly report, the Paris-based IEA said crude exports of Iranian oil averaged 1.16 million barrels a day in January, excluding condensates. Based on preliminary estimates, that figure stayed put in February, according to the agency's data.

That compares with average crude exports of one million barrels a day in 2013, based on the report. Higher exports to India in January and to Japan and South Korea in February.

If Iran's crude exports remain unchanged in coming months, it could prove uncomfortable to U.S. and European officials.

They have pledged to keep the pressure on Iran amid the six month, interim deal. U.S. officials weren't immediately available to comment. An EU spokesman said only that EU sanctions only cover European purchases.

If Iran continues to produce at its current levels, the additional sales would translate to about $6.2 billion in extra revenue for Tehran this year.

Western sanction relief—including the resumption of some petrochemical exports, the removal of frozen assets and other trade—is expected to free up about $4.2 billion for Tehran.

In an interview, Mohammad-Hossein Peyvandi, the deputy head of the state-owned National Iranian Petrochemical Co., said petrochemical exports are also rising. "We have [made] some progress" in selling petrochemicals to Asia, he said. He didn't provide figures. Countries in Asia—notably China and India—are the main buyers of Iran's petrochemicals.

As part of the interim deal, the U.S. suspended sanctions on 14 major Iranian petrochemical companies, making it easier for Asian buyers to purchase their products.