September 10, 2015 | Quote
Iran Gets Ready to Sell to the World
Before the most recent round of sanctions went into effect three years ago, Iran was able to sell oil to 21 countries. By mid-2012, that was down to six: China, India, Japan, South Korea, Taiwan, and Turkey. Rather than immediately pull back on production, and risk damaging oil wells by slowing them down, Iran decided to store its excess crude. As it scrambled to build onshore tanks, the government loaded millions of barrels onto its suddenly out-of-work fleet of crude-carrying vessels.
The Iranians eventually reduced their oil output by about a third, to a low of 2.5 million barrels a day in mid-2013, according to data compiled by Bloomberg. As exports fell to 1 million to 1.5 million barrels a day, Iran kept filling its tankers with oil it couldn’t sell. By this summer, a large portion of its tanker fleet, one of the world’s biggest, sat parked off the coast, filled with 50 million to 60 million barrels of crude and condensate, a lighter form of oil used to make petrochemicals.
Since the nuclear agreement between Iran and six other nations was reached on July 14, the regime has been preparing to ramp up its exports and sell that stored oil. A small number of Iranian tankers believed to have been storing crude has left the Persian Gulf in the past several weeks, according to data compiled by Bloomberg. Three of those ships have since disappeared from detection by failing to report their location.
Some Iran watchers say Western companies will proceed with caution. “You’re not going to see an energy gold rush in terms of capital investment in Iran anytime soon,” says Mark Dubowitz, executive director of the Foundation for Defense of Democracies in Washington and a supporter of tougher sanctions. “The majors are still reluctant to make multibillion-dollar commitments to Iran.”
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