28 Mar 2024
Sunday 19 February 2017 - 11:37
Story Code : 251701

Resumption of Iranian oil shipping off to slow start

Al Monitor| Dr. David Ramin Jalilvand: In mid-January, an Iranian oil tanker leased to a Spanish oil company reached Europe. Itcalled at thePort of Algeciras in Spaintwo days afterthe one-year anniversary of theimplementation of the Joint Comprehensive Plan of Actionand shortly before US President Donald Trump took office on Jan. 20. The managing director of the National Iranian Tanker Company (NITC), Sirus Kianersi, hailedthe development:"Today, after resolution of insurance, classing, flagging and international certification issues for Iranian vessels, we have witnessed anotherJCPOA achievement for the country's marine transportation."


Before the nuclear deal was reached, it would have been impossible for an Iranian tanker to unloadIranian crude oil at a European portdue to the EU sanctions against Iran. Amongother things, these restrictions bannedEuropean imports of Iranian crude, preventedEuropean energy companies from entering Irans energy industry, cutIran offfrom international banking and insurance systemsand since 2012, denied the NITC access to European ports.

In several respects, the NITCs resumption of oil deliveries to Europe is a big step forward for Tehran and a sign that the nuclear deal is working towardending Irans isolation.

For instance, Iran can now finally utilize its own tankers. The countrys fleet is among the worlds largest, though rather old and thus only partially operational. Apart from the cost dimension using its own tankers willlikely be cheaper for Iran than needing tohire probably reluctant foreign services there is also a political dimension. Wary of engaging with Tehran even asthenuclear-related sanctions are lifted, international shipping lines as well as their insurers might take an even more cautious stance towardthe country in light of potentialnew US sanctions targeting international firms engaged with Iran. It should be noted thatin 2010, the US Treasury DepartmentfinedDanish shipping giantMaerskmore than $3 millionin relation to its engagements with Iran. Tehran is certainly more flexible and secure in terms of ensuring steady deliveries using its own ships.

By and large, however, the stepdoes little to change the outlook for Irans energy industry.In the year since the January2016 implementation of the nuclear deal, Iran has already achieved the maximum of what was possible in the short term. The country has steadily moved back to its pre-sanctions position in terms of crude oil production and exports, with output reaching 3.7 million barrels per day (mbpd) by the end of 2016 and exports of crude and condensate peaking at 2.6 mbpdin September though some sources put it as high as 2.8 mbpd.
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