The US administration is taking steps to ensure that customers can continue to purchase Iranian crude during an interim period before a nuclear agreement can be fully implemented and sanctions lifted.
According to Argusmediam, the US departments of treasury and state issued guidelines on Saturday for how they will handle Iranian oil and petrochemical exports in the wake of a 14 July agreement the US and its P5+1 negotiating partners reached with Tehran. That accord swaps sanctions relief for nuclear concessions.
US will allow 14 companies to export petrochemicals from Iran. US administration officials estimate it will take six to nine months before compliance with the nuclear provisions can be assured and sanctions lifted.
Under US law, Obama is authorized to impose sanctions on banks in countries that refuse to reduce their purchases of Iranian oil significantly. The US is pledging not to impose sanctions on financial institutions in those countries. And the US will not target non-US companies that help facilitate those purchases.
Iran produced 2.8 million bpd in July, up from 2.7 million bpd in June, making it OPEC's third largest oil producer. Iranian officials have said their oil sector needs $180 billion in new investment.
US officials estimate that sanctions have cost Iran more than $160 billion in oil revenue since 2012.
During the nuclear negotiations, Iran's oil exports have been limited to 1.3 million bpd, down from 2.5 million bpd before the sanctions were imposed in 2012. Six countries—China, India, Japan, South Korea, Taiwan and Turkey—are major buyers of oil from Iran.
Elaborating on Iran's plan to boost oil export in post-sanctions era despite the present oil glut, Oil Minister Bijan Namdar Zanganeh said, "Iran's oil production in post-sanctions era will reach 3.9 million per day."
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Plunging Prices
Oil prices have suffered a drastic decrease in a 23-day period after Iran and P5+1 finalized a deal on Iran's nuclear activities.
Since July 15, prices have dropped $8. Brent crude oil, which stood at $55 on July 15, has now dipped below $47 a barrel. Given Iran's 1.3 million daily export, it is projected that the country's oil revenue has dropped by 13%—$214 million— in the period.
"Iran is ready to increase oil exports to Japan to the pre-sanctions level," director of international affairs at the National Iranian Oil Company, Seyyed Mohsen Qamsari, said.
The Showa Shell Sekiyu Kabushiki Kaisha Company, the base of Royal Dutch Shell group in Japan, has expressed willingness to increase oil imports from Iran, Qamsari quoted the Japanese company's representative as saying during a visit to Iran.
Japan hopes to raise oil imports from Iran that supplied 10% of the Asian nation’s crude before sanctions were imposed on the Islamic Republic in 2011. It currently provides 5% of its crude from Iran.
