As the deal to lift Iranian oil sanctions goes through, some countries in Asia are already looking forward to Iran’s return to the market.
Remember, many of these countries have been loyal customers for Iran throughout the duration of its sanction. In fact, sometimes they were the only customers after the sanctions were tightened in 2012.
China, the world’s largest energy producer, buying roughly 1.2 million barrels of oil from Iran in May, 2015.
And India’s oil ministry officials has already reported said that their purchases will increase as soon as sanctions are lifted, saying, “There are refiners… who want to buy Iranian oil.”
South Korea, too, is ready to take advantage of the new Iranian supply. The country’s top refiner SK Energy has already said it will begin imports when sanctions are lifted. One of the two South Korean refiners that has been importing Iran’s oil at low sanction levels claims a higher import rate could “improve margins in the long run.”
However, all of Iran’s potential customers have the same concern: selling oil while there is a glut in the market.
After all, Iranian crude oil has increased in price, becoming more expensive than some other Middle Eastern countries’ product. It is also mainly a light condensate, and there are better grades available on the market.
To catch back up to pre-sanction market share levels, Iran will have to target customers looking to expand their import portfolios before it can lower prices and offer more cost-effective product.
But even if new customers are not waiting at the door in the beginning of 2016, when most of the sanction restrictions will be removed, it seems Iran’s current customers will be staying loyal and supporting the country’s entrance back into the oil markets.
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Until next time,
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