Iran Turns to Europe to Shore Up Crude Exports

Iran is banking on customers in Europe to shore up crude oil exports as the country faces the prospect of losing its foothold in Asian markets that take in the bulk of its shipments.

In an interview on Tuesday, Iran's first deputy oil minister, Marzieh Shahdaei, said the country is in negotiations to secure new buyers in Europe, playing down concerns about lower purchases by key customers such as India.

"We are in talks with new customers for our crude oil. Our approach is to raise oil exports to European countries," Shahdaei was quoted as saying by Tasnim News Agency.

"Some of our customers in Asia have reduced imports, but that does not undermine Iran's crude exports," said Shahdaei, who was promoted to Iran's second highest executive role in the petroleum industry after leading the country's state petrochemical company, NPC, for over a year.

Iran's export of crude oil and condensate, a type of ultra light crude, stands at 2.6 million barrels per day, nearly 40% of which are sent to Europe, according to officials at government data.

Refiners in Italy, France, the Netherlands, Greece and Turkey are the biggest customers of Iranian crude in Europe, according to ISNA.

"As negotiations with European countries bear fruit, the share of Europeans from Iran's oil exports will rise," she added.

Shipments to Asia have been strong. China, India, South Korea and Japan imported around 1.9 million barrels per day of Iranian crude in September, Reuters reported last month, citing government and ship-tracking data.

However, India, one of Iran's few oil customers under international sanctions, has persistently cut imports in recent months in retaliation for Tehran's hesitation to hand over an offshore gas project to Indian companies.

India’s oil imports from Iran declined by about two-fifths from a year ago to 467,600 bpd in October.

The decision to reduce Iranian imports has been spearheaded by state refineries, but private refiners have also cut down their intake.

In the first nine months of the year, Essar, one of India's biggest private refiners, received 18.7% less oil from Iran at about 135,000 bpd. The September imports also fell by about 26.4% from the same month a year ago.

Iran's crude oil production capacity is planned to rise by nearly 1 million barrels a day to about 4.7 million bpd by 2021.

It currently pumps around 3.8 million barrels a day within the limits of an agreement between the Organization of Petroleum Exporting Countries and some non-OPEC members to curb crude supplies.

Another factor that would possibly affect Iran's oil market is the renewal of US sanctions, a move that could make foreign buyers reluctant toward Iranian barrels in fear of being penalized by Washington.