Oil in Global Economy Series: Iran’s oil exports hit highest since nuclear agreement but that to change soon

Iran’s oil exports have hit the highest level since the country reached an agreement with six world powers (United States, United Kingdom, Germany, France, China, and Russia) in 2015 to abandon its ambition of nuclear weapon by curbing the Uranium enrichment process in exchange for sanctions relief. According to reports, exports have hit 2.7 million barrels (2.4 million barrel crude oil +0.3 million barrel condensate) per day in May, up from 2.6 million barrels per day in April. The bulk of the Iranian exports (approx. 67 percent) go to Asia, with India and China being the biggest buyers. The majority of the rest goes to Europe.

We expect these numbers to change and head downwards, once the U.S. sanctions come alive in the second half of the year.

India has announced that it has no plan to curb Iranian imports as it would only follow UN sanctions, and no unilateral one, even if those are imposed by the United States. China is also likely to continue its purchase of Iranian crude oil, with the country being a fierce opponent of U.S. decision to withdraw from the Iran nuclear agreement.

Iran's Leader Ayatollah Seyyed Ali Khamenei said last month that European powers must protect Iranian oil sales from US sanctions, and continue buying Iranian crude if they want Tehran to stay in the nuclear deal. However, according to a Reuters’ report, several large European companies in France, Spain, Italy, and Greece are reportedly admitting that they won’t risk U.S. sanctions to facilitate shipments of Iranian oil to Europe.