Major World Refineries Eye Iran Oil, Condensates
LONDON (Dispatches) — A breakthrough in negotiations to revive the nuclear deal (Joint Comprehensive Plan of Action) between Iran and western countries could eventually bring some 2 million b/d of Iranian oil back to the market.
The rival producers and traders have been eyeing how the competitive landscape may shift if sanctions are lifted on Iranian oil sales.
Most experts expect an agreement on the deal (JCPOA) to be reached within months, if not weeks, which could eventually bring some 2 million b/d of Iranian oil back to the market.
Much of Iran’s production is of heavier grades and condensate, and a relaxation of the sanctions will put pressure on the likes of neighboring Saudi Arabia, Iraq and Oman, and even Texas frackers.
Refineries worldwide, meanwhile, will likely cheer the extra availability of Iranian crude.
The refining hubs of Asia -- China, India, South Korea, Japan and Singapore -- have regularly processed Iranian grades, as the high sulfur content and heavy or medium density fit the diet of these complex plants.
European refineries, especially those in Turkey, France, Italy, Spain and Greece, are also likely to return to purchasing Iranian oil once the sanctions are removed, as the additional volumes figure to be price-advantaged to Brent-linked crudes from the Mediterranean.
Some of Iran’s heavy sour grades compete directly with crudes such as Saudi Arabia’s Arab Heavy, Arab Light and Arab Medium; Iraq’s Basrah Light, Basrah Medium and Basrah Heavy; Russia’s Urals; the UAE’s Upper Zakum; Oman Crude Blend; Kuwait Export Crude; Venezuela’s Mesa 30 and Merey 16; and Mexico’s Mata, among others.
Iran also produces and exports ultra-sweet low sulfur oil or condensates, especially from South Pars, which is similar to condensates produced by Norway, Qatar, the U.S. and Australia.
Iranian crude and condensate exports were averaging as high as 2.90 million b/d in early May 2018, when U.S. under the Trump administration withdrew from the Iran nuclear deal.
Since then, exports have fallen to below 1 million b/d in some months, though volumes have now rebounded somewhat as the indirect nuclear deal negotiations launched in April, with China a particularly eager buyer at discounted prices, according to market sources.
S&P Global Platts Analytics forecasts Iran’s crude and condensate exports will grow from about 800,000 b/d in April to 1.4 million b/d in December and 2.0 million b/d by July 2022, on expectations a deal can be reached to offer full sanctions relief by September.
Global crude prices have staged an impressive rally, recovering to pre-COVID levels. However, many U.S. Gulf Coast crude differentials and regional spreads are yet to normalize, raising the question if the 2020 demand shock and ongoing infrastructure buildout will have a permanent impact on relative prices.
The rival producers and traders have been eyeing how the competitive landscape may shift if sanctions are lifted on Iranian oil sales.
Most experts expect an agreement on the deal (JCPOA) to be reached within months, if not weeks, which could eventually bring some 2 million b/d of Iranian oil back to the market.
Much of Iran’s production is of heavier grades and condensate, and a relaxation of the sanctions will put pressure on the likes of neighboring Saudi Arabia, Iraq and Oman, and even Texas frackers.
Refineries worldwide, meanwhile, will likely cheer the extra availability of Iranian crude.
The refining hubs of Asia -- China, India, South Korea, Japan and Singapore -- have regularly processed Iranian grades, as the high sulfur content and heavy or medium density fit the diet of these complex plants.
European refineries, especially those in Turkey, France, Italy, Spain and Greece, are also likely to return to purchasing Iranian oil once the sanctions are removed, as the additional volumes figure to be price-advantaged to Brent-linked crudes from the Mediterranean.
Some of Iran’s heavy sour grades compete directly with crudes such as Saudi Arabia’s Arab Heavy, Arab Light and Arab Medium; Iraq’s Basrah Light, Basrah Medium and Basrah Heavy; Russia’s Urals; the UAE’s Upper Zakum; Oman Crude Blend; Kuwait Export Crude; Venezuela’s Mesa 30 and Merey 16; and Mexico’s Mata, among others.
Iran also produces and exports ultra-sweet low sulfur oil or condensates, especially from South Pars, which is similar to condensates produced by Norway, Qatar, the U.S. and Australia.
Iranian crude and condensate exports were averaging as high as 2.90 million b/d in early May 2018, when U.S. under the Trump administration withdrew from the Iran nuclear deal.
Since then, exports have fallen to below 1 million b/d in some months, though volumes have now rebounded somewhat as the indirect nuclear deal negotiations launched in April, with China a particularly eager buyer at discounted prices, according to market sources.
S&P Global Platts Analytics forecasts Iran’s crude and condensate exports will grow from about 800,000 b/d in April to 1.4 million b/d in December and 2.0 million b/d by July 2022, on expectations a deal can be reached to offer full sanctions relief by September.
Global crude prices have staged an impressive rally, recovering to pre-COVID levels. However, many U.S. Gulf Coast crude differentials and regional spreads are yet to normalize, raising the question if the 2020 demand shock and ongoing infrastructure buildout will have a permanent impact on relative prices.