Iran oil exports expected to increase further despite continued Western sanctions

Iran oil exports expected to increase further despite continued Western sanctions
Iran's oil exports have accelerated over the past few months and are expected to grow further still as China continues to buy from the heavily-sanctioned Islamic Republic.
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If a nuclear deal is reached between Tehran and Washington, Iran could look to South Korea and Europe for new buyers [source: Getty]

Iran increased its oil exports in June and July and could raise them further this month by offering a deeper discount to Russian crude for its main buyer China, firms tracking the flows said.

Despite US sanctions Iran has boosted oil exports, largely to China, during President Joe Biden's term, but shipments have recently slowed due to competition with Russian crude.

"Iran has been exporting more since the new US administration - oil, products and petrochemical goods," Sara Vakhshouri of Energy consultant SVB International said.

And while high oil prices have reduced pressure on Tehran to do a nuclear deal, if talks to resurrect one succeed it would allow Iran to boost sales beyond China, to former buyers in South Korea and Europe.

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Iran's oil ministry did not reply to a request for comment.

Chinese crude imports could recover in August as the pricing advantage of Russian oil, displaced by falling demand in Europe on concerns about sanctions over Russia's invasion of Ukraine, wanes, Emma Li, analyst at Vortexa Analytics, added.

"Iranian crude was facing strong competition from Russian Urals in July as the non-sanctioned barrels were offered at similar discount levels. However, as the price difference of the two widened, Chinese refiners may turn back to cheaper Iranian barrels in August," Li said.

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By importing heavily discounted Russian and Iranian crude, China is boosting the competitiveness of its economy versus the West which is paying much higher prices for alternative crude grades from the Middle East, Africa and the United States.

China's foreign ministry said in response to a Reuters query, that while not aware of the details of oil flows from Iran, Beijing has long opposed Washington's sanctions.

"China maintains normal trade with both Iran and Russia in various areas including oil. These legitimate cooperations deserves respect and safeguarding," a spokesperson said.

Former US President Donald Trump withdrew from Iran's nuclear deal with world powers in 2018 and reimposed sanctions, seeking to exert maximum pressure on its oil exports and income.