European Refiners Keen on Iranian Oil

European Refiners Keen on Iranian Oil

European refiners from Spain to Greece are ready to resume purchases of crude from Iran as talks on a nuclear deal that could allow the country’s return to oil markets remained deadlocked.
Italy’s Saras SpA said it would buy Iranian crude if sanctions were to end, while Spain’s Cepsa SAU said it would “definitely” consider it. Hellenic Petroleum SA said the return of Iranian barrels would be positive for refiners.
“As soon as Iranian oil becomes available, we will certainly start buying again,” Loukas Tripelopoulos, a spokesman for Motor Oil Hellas SA, was quoted by Bloomberg as saying. “Motor Oil was always very fond of Iranian crude.”
Italy, Spain and Greece were the top European buyers of Iranian crude until the imposition of sanctions on the Middle East nation in 2012, according to data from the International Energy Agency. Together, they imported 456,000 barrels a day in 2011, or 78% of total Iranian shipments to Europe.
The return of Iran would be positive for refiners that replaced some of those barrels with more expensive Russian Urals, said Ehsan Ul-Haq, a senior analyst at KBC Process Technology Ltd. The availability of Iranian oil would increase competition among heavy sour grades in the region, putting downward pressure on prices.
“If Iran comes back, they have the possibility of getting medium sour crude at cheaper price than Urals,” Ul-Haq said. “This will make the overall refinery economics in the Mediterranean better.”
Last month, Urals sold at the highest premium to Dated Brent, the global benchmark for oil, in more than a year and a half, according to a survey of traders and brokers who monitor the Platts pricing window.
Tehran is under punitive economic sanctions because of its nuclear program. After marathon talks in Lausanne, Switzerland, Iran and P5+1 (Britain, China, France, Russia, the US plus Germany) reached a framework agreement on April 2 that calls for lifting all trade sanctions against Iran. The details of the agreement are to be finalized by Monday.


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