The first shipment of Iranian crude oil to the European Union in more than three years is poised to depart as soon as Monday, Iranian officials said.
A tanker chartered by French energy giant Total SA is expected to sail with 2 million barrels on Monday, the officials said. Two others will carry 1 million barrels each for Spain’s Compañía Española de Petróleos, or Cepsa, and Litasco, the trading arm of Russia’s Lukoil, they said.
The ships are carrying a portion of a flood of new oil that Iran says it is producing since world powers agreed to lift Western sanctions related to the country’s nuclear program. Those sanctions crippled Iran’s oil industry, reducing its export capacity by more than 1 million barrels a day.
Rokneddin Javadi, the deputy oil minister, was quoted by state television broadcaster Press TV on Sunday as saying that Iran’s crude-oil production had increased by 400,000 barrel each day. That is the bulk of its stated short-term, post-sanctions target of ramping up production by 500,000 barrels a day.
Litasco, Total and Cepsa didn’t respond to requests for comment over the weekend. Iranian officials said the companies were loading over the weekend at Iran’s oil terminal at Kharg Island.
Iran is aiming its new exports at two of its prime customers before sanctions: Asia and Europe. While some Asian buyers continued doing business with Iran at reduced rates during sanctions, Europe had imposed a total embargo.
Now Iran has lowered its prices to refineries along the Mediterranean Sea in an effort to compete with rivals like Saudi Arabia and Russia, which had moved to grab Iran’s market share when it was driven out of Europe.
The tankers began loading after European oil traders and shippers won a key victory allowing the cargoes to be insured. The American Steamship Owners Mutual Protection and Indemnity Association, Inc., or American Club, said U.S. sanctions preventing it from covering cargoes originating from Iran had been removed.
The new Iranian oil has weighed on crude prices, which already were struggling. Prices have fallen more than 70% since their June 2014 peak of $114 a barrel, largely because new supplies from the U.S., Saudi Arabia, Russia and Iraq have outrun growth in the demand for crude.
Iran is a member of the Organization of the Petroleum Exporting Countries, which produced an additional 280,000 barrels a day last month, said the International Energy Agency, which tracks oil and gas data for industrialized countries. As a result, inventories will build by 2 million barrels a day in the first three months of 2016, it added.
By Market Watch