Two European refiners are set to receive their first oil cargoes from Iran since international sanctions were lifted in January against the country that is ramping up crude exports to take back market share.
Iran has pledged to increase production following the removal of sanctions and it declined to participate in a meeting on April 17 of producer group OPEC and non-member nations aimed at reaching a deal to freeze output to prop up prices. The talks collapsed, Reuters reported.
Italy's IPLOM booked a 1 million barrel cargo of Iranian crude that is sailing towards the country aboard the Poetic, industry sources told Reuters. It will be the first post-sanctions cargo to arrive in Italy.
Oil trading and shipping sources said Greek refiner Motor Oil Hellas would also receive its first post-sanctions delivery of Iranian crude aboard the Kriti Breeze, which loaded at Kharg Island on April 20. The company did not respond to a request for comment.
Both refiners bought Iran's oil before sanctions against the country's nuclear program effectively halted its shipments to Europe, which had accounted for more than a third of its exports.
France's Total, Spain's Cepsa and Greece's Hellenic Petroleum have booked Iranian crude for their European refineries this year.
Others, including Italy's Saras and ENI, have expressed interest in buying. But exports have been much slower than Iran targeted due to struggles with shipping and insurance.
The Persian Gulf country is also doing well in Asian markets amid a persisting oversupply and tight competition for market share.
According to data gathered by Reuters, imports of Iran's top four buyers—China, India, Japan and South Korea—reached 1.56 million barrels per day in March, up 49.9% from a year ago, according to government and tanker-tracking data.
------- Resurging Producer
Iran's exports peaked at just over 2.5 million barrels per day in 2011, making it the second-largest exporter that year after Saudi Arabia. Its exports fell to a little more than 1 million bpd after tougher sanctions in 2012.
According to data from Energy Aspects, global imports of Iran's crude rose in March to 1.90 million bpd, from 1.51 million bpd in February. The country has pledged to retain market share by reaching its pre-sanctions output level of 4 million bpd by June.
"Buyers are gradually finding ways to handle the issues with shipping insurance and banking transactions, which in the end are hurdles rather than insurmountable barriers," said Richard Mallinson, an analyst with Energy Aspects.
"As more buyers join in, we could see flows to Europe increase, which is certainly a goal for Iran."
Mallinson noted that most exports had come from inventories rather than output from oilfields, meaning Iran could struggle to sustain the levels as stocks decline.
