TEHRAN –Asian refiners, traditionally big buyers of Iranian oil, are keen to resume imports from Iran.
Japan’s top refiner has declared it has plans to resume oil imports from Iran amid growing interest among Asian peers to follow the suit.
Chairman of Eneos Holdings Inc Tsutomu Sugimori said on Thursday that the Japanese refiner will consider resuming oil imports from Iran.
The announcement comes amid Japan’s efforts to prevent a sharp rise in fuel prices as the country fears a collapse of talks over Iran nuclear deal and rising tensions between Russia and Ukraine could impact a global market already affected by the spread of the coroanvirus.
That comes a day after authorities in South Korea made similar statements about a potential resumption of oil imports from Iran after they held talks with an Iranian delegation in Seoul.
In fact, some South Korean refiners have been facing problems replacing Iranian grades of oil since the sanctions hit the industry three years ago.
They say the increase would mostly benefit traditional customers of Iranian crude in Asia, including China, India and South Korea.
Meanwhile, OPEC+ will work to integrate Iran into its oil supply-limiting accord, seeking to avoid market share competition that could hit prices.
Potentially 1.3 million barrels per day (bpd) of Iranian oil back into the market could ease tight global supply and take some heat out of a rally that has taken benchmark prices to just a few dollars short of $100 a barrel.
Iran is exempt from the existing deal between the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, to limit oil supply. While that exemption allows Iran to boost output, OPEC+ would eventually seek to bring Iran into the accord, sources said.
A source familiar with Iranian thinking said Iran would seek to restore its lost output, but would likely, after talks with OPEC+, agree to a quota. Iran is one of the five founding members of OPEC.
Iran is pumping about 2.5 million bpd, some 1.3 million bpd.
“Iran will increase its oil production according to its facilities, capabilities and interests, to compensate for its lost oil revenues,” the source familiar with Iranian thinking said.
“In my opinion, OPEC+ will set a quota for Iran’s oil production but will apply it gradually, and Iran will accept the quota with some bargaining to show its support for OPEC.”
OPEC+ is gradually boosting oil output after making record cuts in 2020 when demand collapsed due to the pandemic. But it has failed to hit its target because some producers did not make the investment or do the maintenance needed on oilfields during the pandemic to keep those facilities ready to increase output quickly.
OPEC+ sources have also made the point that extra Iranian supply could also help plug the hole in OPEC’s output target misses.
OPEC+ has not dealt with this issue by, for example, having larger producers step in to boost output to compensate for those who cannot. These talks can be difficult as they encroach on sensitive topics such as national prestige and market share.