Markets ignore scenarios for the return of Iranian oil soon |


Tokyo – Most of the former buyers of Iranian oil in Asia resist the possibility of Tehran quickly resuming oil exports due to their lack of a green light from the United States, which imposes an almost complete economic blockade on Tehran, including an embargo on the oil, banking and shipping sectors.

This position comes as Indian refiners and at least one European refiner are re-evaluating purchases to make room for Iran’s oil in the second half of 2021, after President Hassan Rouhani said last Thursday that “the United States is ready to lift sanctions.”

This raises the curiosity of dealers who want to know the direction that the Japanese and South Korean refiners will take, after the countries were the third and fourth largest buyers of crude and condensate from Iran, with imports amounting to about 450 thousand barrels per day on average between 2016 and 2018.

During Iran’s two-year absence from the list of suppliers due to sanctions, Japanese and Korean refiners have replaced Iranian supplies with crude and condensate from producers in the Middle East, Australia, the United States and Mexico.

A Fuji Oil spokesman told Reuters, “As soon as Iranian oil is available for import, we will study its economic feasibility as we do with oil from any other countries, and it is likely that we will resume the import if it is economically feasible.”

Barclays: Reviving the nuclear deal poses major risks to oil prices

“Even if sanctions are lifted, buyers will need to make sure banks are able to transfer money, that shipping companies will be able to send tankers to Iran, and that insurance companies can provide insurance cover,” said a procurement official at a Japanese refinery, who asked not to be named.

The official in the company believes that “it will take a long time due to our need to overcome these obstacles.”

Ineos Holdings, the largest Japanese refiner, did not take any step regarding possible purchases of Iranian crude, but indicated that it would inspect “the matter in the future, while paying attention to any steps regarding US sanctions.”

Competitors from South Korea take a similar stance. “It would be good if Iranian oil could be imported, but it would not affect us much if it could not be imported,” a Korean buyer said. “It is possible that we can resume imports of Iran’s oil if it will generate money.”

In Taiwan, a spokesman for Formosa Petrochemicals said that Iranian oil prices should be competitive with Saudi crude in order to be attractive.

The current situation casts a gloomy shadow over the markets. The state refining company, Hindustan Petroleum, expected on Friday that oil prices would decline and remain below $ 70 a barrel if Washington lifted sanctions on Tehran.

M.K. said: Sorana, Chairman of the Company’s Board of Directors, “There have been fluctuations in oil prices during the last four days between $ 70 and $ 65 per barrel due to the ongoing discussions regarding Iran, and any positive step in this regard will reduce crude prices.”

“We do not expect a significant rise in crude prices above $ 70,” he said, adding that “the lack of progress in talks with Iran is already calculated in prices.”

India is the third largest consumer and importer of oil in the world, and it stopped imports from Tehran in 2019 with the expiration of a temporary exemption period granted to a number of countries after the withdrawal of former US President Donald Trump from the nuclear deal in 2015.

Meanwhile, Britain’s Barclays Bank has warned that a speedy deal on reviving the nuclear deal could pose significant risks to oil prices during the second half of 2021.

But he said in a note that this could lead to a slower rate of diminishing OPEC + production restrictions, which would cushion the effect of that. And it kept its forecasts for average oil prices for Brent and West Texas Intermediate at $ 66 and $ 62 a barrel, respectively.

As the world awaits the fate of the Vienna talks, a recent report revealed that Iran continues to circumvent sanctions by using cryptocurrencies to sell crude.

A study by the blockchain analytics firm Eleiptek concluded that 4.5 percent of all Bitcoin extraction takes place in Iran, generating millions of dollars for the country in the form of cryptocurrencies that can be used to finance imports.

Iran sells its energy reserves on world markets, using the Bitcoin mining process to circumvent trade sanctions

Figures indicate that Iran’s production of Bitcoin is equivalent to revenues of about one billion dollars annually, at current extraction levels.

While the exact numbers are “extremely difficult to pin down,” Elliptek’s estimates are based on data from Bitcoin extractors compiled by the Cambridge Alternative Financing Center up to April 2020, and data from the Iranian government-controlled power generation company in January that up to 600 megawatts of Electricity is used by cryptocurrency miners.

Tehran has officially recognized the extraction of cryptocurrencies as an industry in recent years, to provide it with cheap electricity and obligate its extractors to sell it to the central bank.

And cheap electricity attracted more miners, especially from China, to Iran. Tehran allows cryptocurrencies mined in Iran to finance authorized imports of goods.

“Iran has realized that extracting Bitcoin implies an attractive opportunity for an economy that is under the yoke of sanctions and suffers from a shortage of cash liquidity, with a surplus of oil and natural gas,” the study said.

According to the study, the electricity used by cryptocurrency extractors in Iran requires about 10 million barrels of crude annually to generate it, which is about 4 percent of Iran’s total oil exports in 2020.

“Therefore, Iran is practically selling its energy reserves on the global markets, using the Bitcoin mining process to circumvent the trade sanctions,” she added.

The Central Bank of Iran prohibits trading in bitcoin and other cryptocurrencies extracted abroad, but the currencies are widely available on the black market, as local reports indicate.


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