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Iran says oil exports, production holding up despite looming sanctions

Iran’s oil exports have only declined “very slightly,” while production has remained level, the managing director of National Iranian Oil Company said Tuesday.

“We are very solid now” in terms of production outlook, Ali Kardor said at an oil and power conference in Tehran, though he conceded that this could change depending on how NIOC’s sales volumes hold up.
Iran faces the reimposition of US sanctions targeting its oil sales on November 5. Many buyers of Iranian crude are already ramping down their purchases ahead of the deadline.

Oil exports from the country fell to their lowest level in at least two and a half years in September to 1.7 million b/d, from 1.92 million b/d in August, according to S&P Global Platts trade flow software cFlow, though some shipments not visible through vessel-tracking data are suspected to be taking place. About 1.5 million b/d of the September figure consisted of crude oil, while the remainder was condensate.

Iran’s crude production, meanwhile, dropped to 3.50 million b/d in September from 3.60 million b/d in August, the latest Platts OPEC production survey found.

Iran, however, self-reported to OPEC that its September output was much higher at 3.76 million b/d, down from 3.81 million b/d in August.

To get around the sanctions, Iran has reactivated its domestic exchange, or bourse, where private traders can buy Iranian crude to resell into the international market, rather than NIOC selling directly to refiners.

NIOC aims to launch a sale of 1 million barrels on October 26. At the conference Tuesday, Kardor said the base price for the crude, which will be sold in 35,000 barrel lots, had been set at $79.15/b, pending market conditions.

Many analysts doubt the bourse, last used four years ago when US and EU sanctions were in force, will be very successful, as any international buyers would still likely to be subject to US sanctions for dealing with Iranian entities.

Iranian oil minister Bijan Zanganeh said the looming sanctions had impacted investment in Iran’s oil industry, but he said Iran would try to find ways to finance technology and know-how through domestic markets to keep the oil flowing.

“The sanctions are certainly harmful but we should try to minimize the harm,” he said at the same conference. “Some foreign companies are not willing to make investment in Iran oil and gas industry. This will be for a while, until the US unilateral sanctions are removed. But it doesn’t mean we can’t do anything. More than money, we need technologies and management.”

He reiterated his criticism of the US for its sanctions – not only against Iran but also against fellow oil producers Russia and Venezuela – for destabilizing the market and disincentivizing investment, which he said could lead to a supply shortage in the next few years.

“The market is smart and it realizes the sanctions impact would surface in production three years later,” he said. “And this expectation influences today’s price.”

Source: Platts

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