Jan 30, 2019 General Comments Off on Asia resumes Iran oil imports at lowered rates as waiver window shrinks
Asian imports of Iranian crude oil have just started to return but at sharply lower levels as top customers China, India, Japan and South Korea press for additional US sanctions relief when their waivers expire in May.
Imports by South Korea, Japan and India have been slashed at least by half from levels before November, when the US re-imposed sanctions on Iran's oil trade, according to S&P Global Platts calculations.
Japan became the latest importer to resume loading Iranian oil on January 20, after South Korea received its first post-sanctions cargo a day earlier.
They are among eight countries with 180-day waivers allowing them to keep importing Iranian oil through May 4. Confusion surrounding shipping, insurance and banking rules under the US sanctions kept some of the countries from resuming imports for months after the US granted waivers.
Asia bought more than half of Iran's oil exports before the latest US sanctions, and China and India had accounted for more than 80% of those imports.
S&P Global Platts Analytics expects Iran's oil exports to average 1.2 million b/d in January-April and fall to 860,000 b/d by the fourth quarter of 2019, compared with about 2.7 million b/d in early 2018.
US SANCTIONS WAIVER
All transactions under the US State Department's current significant reduction exemptions must be completed by May 4. Fresh waivers would start May 5 for countries that the US determines have met their promises to significantly reduce Iranian imports in the previous six months.
A State Department spokeswoman declined to say this week whether a second round of waivers is in the works.
Our goal remains to get to zero oil purchases from Iran as quickly as possible, she said. We will continue working with countries that are reducing their imports on a case-by-case basis.
Amos Hochstein, an Obama administration energy envoy responsible for Iran sanctions, expects a new round of exemptions to be issued in May.
An SRE signifies that the country has 'reduced' in the previous period and can continue to import for the next one as long as they continue to reduce, he said in an email. As long as a country does not go to zero, they would need an SRE. So, I don't really see how they don't give them in May.
SOUTH KOREA, JAPAN RESUME IMPORTS
South Korea resumed Iranian oil imports in January after a five-month break. SK Innovation is expected to receive 2 million barrels of South Pars condensate by the end of the month, and other refiners plan to resume imports in February.
South Korea is expected to load around 15 million barrels of Iranian oil in Q1, less than half the volume it typically imported on a monthly basis prior to the sanctions, according to Platts calculations based on market information.
That would put South Korea's average imports over the six-month waiver period at 83,000 b/d, or 74% lower than the pre-sanction level of 317,000 b/d in Q1 2018, according to Platts calculations.
From Japan, Showa Shell, Fuji Oil and Cosmo Oil were the first refiners to resume Iranian crude loadings in January � the first in four months � totaling around 4.9 million barrels.
With other refiners planning to resume imports in February, Japan is expected to load about 14 million barrels over January-February, according to Platts calculations based on market information.
That would put Japan's average Iranian oil imports at 78,000 b/d during the 180-day waiver, down 49% from 153,000 b/d imported over May-October 2018, according to Platts calculations.
Japan may have to halt loadings again in March as lifters need to complete voyages before government-backed shipping insurance expires at the end of March for expected renewal on April 1, Japanese industry sources said.
CHINA, TAIWAN OUTLOOK
China's crude imports from Iran recovered in November and December from multi-year lows of 248,274 b/d in October, with much of it going into Strategic Petroleum Reserve tanks and bonded storage in northeastern Dalian, where state-owned National Iranian Oil Company's leased storage tanks are located.
The country imported 506,000 b/d in December, up 30% from November.
But market sources expect Iranian oil imports to slow to as low as 239,000 b/d in January on an expected slowdown in stockpiling activities.
Most barrels delivered this month are likely to head to Maoming, Ningbo, Qingdao and Tianjin, where Sinopec's refineries are located, Platts trade flow software cFlow showed.
China's Iranian crude imports averaged 449,093 b/d over November-December, down 27% from 615,730 b/d over January-October 2018, customs data showed.
Taiwan, which also holds a US waiver, is not expected to take any cargoes for January loading, according to sources from Formosa Petrochemical Corp. and state-owned CPC. It did not import any Iranian crude in October and November, government data showed.
INDIA INTENSIFIES IMPORTS
In India, loading of Iranian crude by a few state-owned refiners is expected to intensify in January and February.
Indian Oil Corp. is targeting up to 5 million barrels in both January and February, according to Indian oil ministry sources. Mangalore Refinery and Petrochemicals Ltd. is likely to aim for 2 million barrels in February, down 1 million barrels from January, while Bharat Petroleum Corp Ltd. and Hindustan Petroleum Corp Ltd. are expected to take 1 million barrels each in February, sources said.
India hopes to get another US waiver to buy Iranian oil for May-November, an oil ministry official said.
There is no question of halting imports of Iranian oil, said a senior official working with one of the state-run refiners. But future purchases from Tehran would be carried out purely on commercial considerations.
Analysts expect India to import an average of 300,000-350,000 b/d from Iran during the current waiver, compared with more than 600,000 b/d in September and nearly 500,000 b/d in October.
Source: Hellenic Shipping News Worldwide
Comments Off on Kim Jong Un Praises ‘Excellent’ Letter From Trump
Comments Off on Experts: XiKim Talks Without Denuclearization Road Map Are Just Talk
Comments Off on Mekong Region Grows More Important to ChinaUS Relations
Comments Off on Pyongyang Meeting Seen as Bolstering Xi Ahead of Trump Talks
Comments Off on Huawei Founder: Revenue Will Be Billions Below Forecast
Comments Off on Hong Kong to Pause Extradition Bill