HOUSTON – Iran is selling three times more oil to India even as its rival oil-producing nations try to work out a deal to cap their collective crude production.
The Islamic Republic’s oil exports have surged by 600,000 barrels a day since December, the month before the United States and five other western powers lifted strict economic sanctions against Iran.
And so far, India has embraced the country’s return to the market by increasing Iranian imports more than any other country, while Europe’s refiners have been much slower to increase purchases of Iran’s oil, according to Genscape, which tracks oil tanker movement.
“They’ve outperformed what the market expected,” and it’s largely thanks to India, said Amir Bornaee, an analyst at Genscape in the Netherlands, in an interview on Monday. All told, Iran’s exports climbed by 140,000 barrels a day last month, reaching 1.7 million barrels a day, according to Genscape.
Some oil-market analysts believed Iran would fall short of its promise to raise its crude exports from 1.1 million barrels a day exports to 2 million in the first few months after the sanctions were lifted.
But earlier this month, India reportedly agreed to buy a monthly haul of 400,000 barrels a day from Iran starting in April, which would easily bring Iran’s overseas sales above its short-term target. Reuters reported the deal earlier this month, citing unnamed sources.
Iran’s exports to India have climbed from 190,000 barrels a day in January to 540,000 barrels a day in March, overtaking Nigeria as the third-largest oil exporter to India, Genscape says.
So far, most of Iran’s export hike to India has displaced Iraq’s and Nigeria’s sales to refineries along India’s eastern coastline. Iran’s fight for market share hasn’t greatly increased Middle Eastern exports to the rest of the world, as crude output among other OPEC nations has slipped somewhat.
“Global supply hasn’t been extremely affected,” Bornaee said. “It’s displacing other countries.”
But Iran’s recent deal with India and its rising crude exports cast some doubt on the effort by Saudi Arabia, Russia and other large crude exporters to stem the decline in oil prices by agreeing to freeze production levels. Several members of the Organization of Petroleum Exporting Countries and other exporters are meeting in Qatar on April 17 to discuss a freeze.
Earlier this month, Saudi Arabia said it won’t cap its oil production unless it is joined by all other major oil producers, including Iran. It’s unclear whether or not Saudi Arabia is merely posturing to bring Iran to the negotiating table, but experts say there are several reasons to take the Kingdom at its word.
“Right now, Saudi Arabia’s biggest political and economic objective is to slow down Iran’s emergence as a major economic player,” even if it means lower oil prices, said Praveen Kumar, executive director of the UH Global Energy Management Institute at the University of Houston, in an April 1 interview.