The likelihood of reaching a nuclear agreement with Iran has increased, drawing attention to Tehran’s sizable stockpile of crude that could be quickly shipped to purchasers should a deal be reached.
According to ship-tracking company Kpler, some 93 million barrels of Iranian petroleum and condensate are now being kept on vessels in the Persian Gulf, off Singapore, and close to China. Vortexa Ltd. pegs the stocks at 60 to 70 million barrels. Smaller quantities are also present in onshore tanks.
The probable removal of US sanctions and Iran’s complete readmission to the global crude market come at a challenging time for oil merchants. As part of the bloc’s response to the turmoil in Ukraine, investors are juggling the countdown to even tougher European Union limitations on Russian crude supplies beginning in December. Additionally, the massive sale from the Strategic Petroleum Reserve under the Biden administration will come to an end in October.
In recent weeks, futures prices have been impacted by the anticipated return of Iranian barrels to the world’s oil markets, which has negated other indicators of tightness. This is true both for the volumes in floating storage and over the long term.
The resuscitation of a multilateral agreement that restricted Iran’s nuclear programme in exchange for the relaxation of associated sanctions, particularly those on oil flows, is the main focus for diplomats. When then-President Donald Trump backed out of the original agreement, it fell through. The US’s answer to the most recent proposal last week. It increased expectations from an agreement soon . However, Tehran said on Sunday that communication will now continue into September.
Iran’s Long Term Plan
According to an assessment from the International Energy Agency, Iran’s offshore crude stockpile compares to the average daily global supply this year, which is thought to be around 100 million barrels per day. Over the course of a six-month period, US President Joe Biden released 180 million barrels from the SPR.
Iran’s daily oil shipments have remained at around 1 million barrels. This is at same level since former President Trump ceased providing waivers to buy Iranian oil as a result of American sanctions, according to Emma Li, an analyst at Vortexa. As other countries withdrew, China has continued to be one of the biggest buyers.
Iran would aim to resurrect production and increase exports if deal is positive. According to a report from Goldman Sachs Group Inc., these might not start until 2023 even after any deal. Although, Goldman is pessimistic about a breakthrough in the near future
Iran may seek to fill the gap left by Russia in Europe, particularly in Spain, Italy, Greece, and even Turkey. But Driscoll noted that Tehran would also work to recapture a portion of the lucrative Asian market.
Europe consumed an average of 748,000 and 528,000 barrels of Iranian oil per day in 2017 and 2018. While Asia used 1.2 million and nearly 1 million barrels per day.
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