JCPOA Impact on Oil Trade

JCPOA Impact on Oil TradeJCPOA Impact on Oil Trade

The lifting of sanctions against Iran's nuclear program has effectively put the country on track to regain its position in the global oil market, the Oil Ministry said in a report.

The report, published by the ministry's Planning Department, said the nuclear deal has enabled Iran to supply its crude to new customers and quickly build on its market that was limited to five countries when sanctions were in place, Shana reported.

Exports of crude oil and gas condensates have more than doubled since President Hassan Rouhani took office in 2013, the report said.

"Before the nuclear agreement, Iran shipped its crude only to five countries [China, Japan, South Korea, India and Turkey], but following the implementation of the JCPOA, exports to former European buyers have resumed," the report said, underlining Russia, Spain, Italy, Greece and Portugal as the main western buyers of Iran's crude.

The first major oil shipments to Europe were made barely a month after the sanctions removal, when three foreign vessels loaded 4 million barrels of Iranian crude from the Kharg terminal in the Persian Gulf for destinations in Europe.

After years of negotiations, Tehran and six world powers reached a historic agreement, officially known as the Joint Comprehensive Plan of Action, in July 2015 on placing time-bound limits on Iran's nuclear program in return for scaling back most western sanctions.

The deal, which came into force in January, has allowed Iran to resume trade and rebuild its political and economic relations with the world, particularly mending ties with most western companies that turned their back on Iran during the sanctions in fear of breaching trade restrictions imposed by the US and EU.

Leasing oil and condensates storage units overseas, access of Iranian tankers to European waters, unblocking billions of dollars in frozen assets, removing bans on purchase of critical oil and gas equipment and opening up investment opportunities to international companies are some of the clear benefits of the nuclear deal, the report added.

------- Fresh Lifeline

The nuclear deal gave a fresh lifeline to Iran's most important business: crude export.

The Middle East nation is currently the third-largest producer of the Organization of Petroleum Exporting Countries behind Saudi Arabia and Iraq, and looks set to regain its market during the sanctions.

It exported around 2.5 million barrels a day before the tightening of sanctions in 2011 and 2012, but sanctions cut exports to barely above 1 million bpd.

Iran's crude production is also near its pre-sanctions production level of 4 million barrels per day. But Tehran wants a bigger piece of the market as it aims to add around 1 more million barrels to its output in a tight race for market share.

The country is pumping more than 3.8 million barrels a day, according to Oil Minister Bijan Namdar Zanganeh who said in the last OPEC meeting in Vienna this month that Iran wants a 14.5% share from the group's total output.

That will put Iran's output at around 4.7 million bpd, considering OPEC's current production level.