Iranian oil quietly flooding into global market again
Iran is shipping the most crude in almost five years, fortifying its re-emergence on the geopolitical stage. Exports have surged to the highest level since US sanctions were re-imposed in 2018, according to a range of analysts including Kpler Ltd., SVB Energy International, FGE and the International Energy Agency. The vast majority is flowing to China – the world’s biggest importer.
Yet the extra supplies are sapping confidence in an oil market weakened by faltering economic growth and cheap Russian cargoes, frustrating efforts by Iran’s partners in the OPEC+ alliance to put a floor under crude prices, Bloomberg reported.
“Iran’s crude exports smashed it last month,” said Homayoun Falakshahi, a senior analyst at Kpler. “Iranian crude is extremely interesting for those willing to take the risk to buy.”
Crude shipments have doubled since last autumn to reach 1.6 million barrels a day in May, even as American sanctions remain in place, according to the firm. Production has hit 2.9 million barrels a day, the highest since late 2018, the Paris-based IEA estimates.
Yet additional shipments — adding to flows from two other OPEC+ members under sanctions, Russia and Venezuela — are already happening, hitting global oil markets.
Iran’s surge has undermined efforts to stabilize the market by the Organization of Petroleum Exporting Countries and its leader, Saudi Arabia, which this month announced a new production cutback of 1 million barrels a day, to little effect.
Ever since US sanctions were reimposed five years ago, Iranian crude has been shipped to its few remaining buyers.
Chinese refiners — especially smaller, independent companies in Shandong province — are ramping up purchases of Iranian cargoes, Kpler says.
Iran’s Deputy Oil Minister, Amir Hossein Zamani Nia, said on Friday sanctions imposed on Iran are aimed at disrupting the world’s energy supply, stressing that Iran will definitely overcome those sanctions.
He made the remarks in a conference celebrating the 60th founding anniversary of OPEC in Iraq’s capital, Baghdad.