Lifting of Iran sanctions to spark fight for oil market share in Asia
The expected return of Iranian oil to the market as US sanctions are likely to be lifted over the next year will offer new opportunities for former buyers in Asia to reshuffle their oil import mixes. Significantly, the return of Iranian barrels will trigger a fierce battle among global suppliers for market share raising the risk of price drops, reported Fitch Solutions.
Updated: 05/07/2021, 5:17 am
A worker passes stores of oil drums and gas flares while working aboard an offshore oil platform in the Persian Gulf s Salman Oil Field, operated by the National Iranian Offshore Oil Co., near Lavan island, Iran, on Friday, Jan. 6. 2017. Photographer: Ali Mohammadi/Bloomberg
Asian refiners poised to heavily favor Iranian condensate for better product margins
Asian refiners equipped with condensate splitters will likely favor Iranian ultra-light crude heavily over other similar grades offered in the market when US sanctions against Tehran are lifted, as the companies expect Iranian South Pars condensate’s steep price discount to boost their product margins.
More and more Asian refiners and petrochemical makers are preparing for a possible resumption in Iranian crude and condensate trades amid growing optimism that severe restrictions on Iran’s oil sales could be lifted before the end of the third quarter.
Iran’s President Hassan Rouhani said on May 20 that a “main agreement” has been reached, with the US broadly committing to lifting its sanctions targeting Iran’s oil, petrochemical, shipping, insurance and banking sectors.
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Most commonly, sanctions and other restrictive measures apply only to persons and entities within the jurisdiction of the issuing country. However, the so-called United States (“U.S.”) “secondary” sanctions have a much wider scope of application in that they have a significant constraining effect on all persons and entities regardless of the location, place of incorporation or national identity. In the EU, measures having such an effect are referred to as extra-territorial measures.
1 The impact of extra-territorial measures on the EU economy has not been insignificant: Since 2018, Airbus lost an estimated €17 billion, having to walk away from a contract with Iran Air, Daimler was forced to terminate its joint venture with an Iranian car manufacturer, French car manufacturers PSA and Renault lost approximately €850 million due to a cancelled deal, and Total had to abandon a €4.25 billion development in the I