In a world awash with cheap oil, buyers in the world’s biggest consuming region aren’t clamoring for an additional 500,000 barrels a day from Iran.
As international sanctions against the country are lifted and Oil Minister Bijan Namdar Zanganeh looks to make good on his pledge to regain market share lost in Asia, he’ll have to contend with a global glut that’s dragged down prices and spawned a buyers’ market with abundant supplies from the Americas to Africa and the Middle East.
While consumers such as Japan’s Cosmo Energy Holdings Co. and India’s Hindustan Petroleum Corp. are open to buying more, they say Iran will have to provide an incentive. Purchases by some customers in Asia dropped about 50 percent after sanctions were imposed on the Middle East producer over its nuclear program.
In South Korea, shipments from Iran have tumbled by more than half since 2011, according to government data compiled by Bloomberg. While Asia’s fourth-biggest oil user imported a record amount of crude last year, purchases from Iran fell about 8 percent to the lowest in data going back to 1995.
Iran was the second-biggest producer in the Organization of Petroleum Exporting Countries before its disputed nuclear program prompted the European Union to ban purchases of its crude in July 2012. Countries including China, India and Japan had to get a waiver from the U.S. to buy limited amounts of Iranian oil or risk losing access to parts of the global financial system.
“Until now, refiners had to annually reduce Iranian crude imports due to international sanctions,” South Korea’s Ministry of Trade, Industry and Energy said in an e-mailed statement on Jan. 17. “They can now voluntarily decide their own import levels, considering domestic demand.”
Iran is targeting an immediate increase in shipments of 500,000 barrels a day, Amir Hossein Zamaninia, deputy oil minister for commerce and international affairs, said Sunday in an interview in Tehran. Iran plans to add another half million barrels within months.
Japan’s Chief Cabinet Secretary Yoshihide Suga said Monday the Asian country “welcomed” that Iran complied with the deal on its nuclear program. The nation cut annual crude purchases from the Middle East producer nearly half to about 166,000 barrels a day by 2014 from 2011 levels, according to data from the Ministry of Finance.
Japan’s Cosmo Energy will decide on an increase in Iranian crude purchases only if it makes economic sense, Eita Ushioda, a Tokyo-based spokesman for the company, said by phone Monday.
“I hope Iran will consider better terms for Indian refineries to make their way in this growing market,” B.K. Namdeo, director refineries at India’s state-run Hindustan Petroleum Corp., said by phone on Monday. “Better terms could be in the form of services like more loading days. Can’t say at this point whether we will be able to return to the volumes before sanctions any time soon. It will all depend on prices and other terms.”-Bloomberg