Saudis Desperate to Slow Iran Oil Exports

Saudis Desperate to Slow Iran Oil Exports
Saudis Desperate to Slow Iran Oil Exports

Saudi Arabia has reportedly banned Iranian oil tankers from entering its waters in an effort to slow Iran’s oil exports.

Iranian ships are restricted from entering Saudi ports, and Bahrain, a Saudi ally, has issued similar restrictions, Oil Price reported, citing a report first published by the Financial Times.

Iran also has been unable to access some oil in storage at a facility in Egypt, which is partially owned by Saudi Arabia. The efforts may have had an impact, as Iranian oil executives say that they have been somewhat stymied.

Oil sitting in floating storage off the coast of Iran has climbed by 10% this year to 50 million barrels.

Before western sanctions, Iran used to send oil by the SUMED pipeline across Egypt, allowing oil to move from the Red Sea to the Mediterranean Sea. The FT said Saudi Arabia is blocking Iran from access to the pipeline, which would ease oil exports to Europe.

On the diplomatic track, the two countries are also at odds over the pending OPEC production freeze deal.

Several major members of the Organization of Petroleum Exporting Countries plus Russia are set to meet in Doha, Qatar, on April 17, but Iran has said that it will not abide by any freeze deal.

Saudi Arabia said last week that it would only participate if Iran also signed up, raising doubts about the viability of the deal. Even with Saudi Arabia, the freeze would amount to little without Iran, since the participating countries have little scope for raising production.

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--- Swipe at Saudis

Iran's Oil Minister Bijan Namdar Zanganeh took a swipe at Saudi Arabia's efforts to undermine Iran's position in the global crude market.

"We are returning to our erstwhile production levels [before the sanctions] and all countries should be aware of that," Zanganeh was quoted as saying by ICANA on Tuesday.

Zanganeh said Saudi Arabia rebuffed an Iranian proposal in the past to decrease OPEC's production ceiling, but it wants Iran to join the pact now that it has borne the brunt of critically low oil prices.

He added that Iran will not be part of any negotiation over freezing crude production at January levels before reaching its pre-sanctions output of 4 million barrels a day–a level last seen in 2010.

Despite the Saudi campaign to slow the growth of Iran’s oil exports, the country is lifting exports.

Last week, the senior oil official said Iran had managed to increase oil and gas condensate exports by 250,000 barrels per day in March, allowing exports to surpass the 2 million-barrel-per-day mark.

Iran is still struggling to obtain full access to insurance for its shipments and ongoing US banking restrictions are throwing hurdles up for Iran’s oil sector. Still, it is making steady progress ramping up exports.