Europe Continues to Purchase Iranian Crude

Europe Continues to Purchase Iranian CrudeEurope Continues to Purchase Iranian Crude

In the wake of the US withdrawal from the Iran nuclear deal, Iran’s European customers are continuing to buy Iranian oil and are in no immediate rush to replace volumes, but some refiners and traders have flagged financing issues as having the potential to stop crude trade with Iran.

After the US walked out of the Iran deal, the US will be targeting Iran’s crude oil sales and sanctions previously lifted under the deal will be reimposed following a 180-day wind-down period, the US Treasury Department said, Oil Price reported.

European buyers are not in an immediate rush to replace Iranian supplies due to that wind-down period, with sanctions expected to bite in November.

Buyers report that they are complying and will comply with any sanctions imposed on Iranian trade, and some of them expect banking issues to arise from the sanctions, such as the availability of trade finance.

Marta Llorente, a spokeswoman for Spanish oil company Cepsa, one of Iran’s customers in Europe, told Reuters, “At this moment, our trading activity is business as usual.”

Italy’s Eni also continues to buy Iranian oil and it is buying 2 million barrels of oil per month from Iran under a deal that expires at the end of the year.

“We’re doing nothing,” said the head of trading at another European customer of Iran’s. “It’s wait and see. If we’re forced to reduce, we will. Iranian is not the only crude.”

Sources at trading companies said, “It looks like you can still go on for six months.”

However, traders expect banks to be vital in determining whether Iran’s customers in Europe can buy oil and even if the US grants waivers to European buyers, whether they will need to reduce their volumes during the wind-down period.

Outside Europe, one of Iran’s single biggest customers—China—has already reassured Tehran that it would continue to import its crude.

Amid the still "wait-and-see" mode in Europe, especially when financing crude oil trade is concerned, Iran says its oil exports will not be disrupted by the reimposition of sanctions.

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