UPDATE 3-Iran's oil exports surge above West's sanctions cap -IEA

Sat Apr 12, 2014 1:20am IST

* February exports revised upwards to 1.65 million bpd

* West seeks to limit exports to 1 mln bpd under recent deal

* US: over 6 months exports to average the target in deal (Recasts to add quotes from State Department spokeswoman and research group analyst)

By Ron Bousso and Timothy Gardner

LONDON/WASHINGTON, April 11 (Reuters) - Iran's crude oil exports have surged to their highest in 20 months, far exceeding a 1 million barrel-per-day limit set by the West under an interim deal on curbing Tehran's nuclear program.

The International Energy Agency's monthly report revised February's global crude imports from Iran upwards by 240,000 bpd to 1.65 million barrels per day, the highest since June 2012.

Under an interim deal signed in November between Iran and six world powers - known as the P5+1 - that came into effect on Jan. 20, Iran's exports are supposed to be held to an average 1 million bpd through July 20.

Tough international sanctions over the past two years have cut Iran's oil exports by about half.

"The question is whether they are going to continue to test the sanctions," said Antoine Halff, head of the IEA's oil industry and markets division.

China accounted for 168,000 bpd of the rise in imports in February, India for 93,000 bpd and South Korea for 83,000 bpd.

On the other hand, Japanese imports of Iranian oil were revised lower by 103,000 bpd, according to the IEA.

"Imports of Iranian oil are running well above 2013 levels for the third consecutive month," the report said.

The Obama administration believes that Iran's oil sales will fall in coming months and average 1 million bpd over the entire six-month period.

"We expect, we still expect, and anticipate that this will average over a six month period ... to meeting the bar that was set," in a White House fact sheet issued at the time of the November deal, State Department spokeswoman Jen Psaki told reporters.

Psaki said several factors, including Iranian contributions of oil to Syria, sales of a light oil exempt under sanctions called condensates, and high winter demand have made Iran's oil sales look high recent months.

The Obama administration believes that Iran is unable to sell Syria oil and, rather, has been giving oil in recent months to the country experiencing civil war. The deliveries do not benefit Iran's economy, State Department officials said.

Preliminary data for March show imports from Iran dropped to 1.05 million bpd "but that figure will likely be revised upwards closer to February levels upon receipt of more complete data," the IEA said.

It said importers of Iranian crude in March included Albania and Syria in addition to regular buyers China, India, South Korea, Japan and Turkey.

The IEA data is based on statistics provided to the organization by member and non-member states as well as shipping data.

Exports of Iranian condensate reached 140,000 bpd in February and 110,000 bpd in March, significantly lower than January's 250,000 bpd, the IEA said.

U.S. lawmakers have traditionally sought tougher measures on Iran than the White House. Earlier this week, Senators Robert Menendez, chairman of the Foreign Relations Committee, and Mark Kirk, a Republican, called on President Barack Obama to "put Iran on notice," that Washington is prepared to reinstate sanctions that would push Tehran's oil sales even lower.

A bill sponsored by Menendez to impose new sanctions on Iran stalled earlier this year, in part because of optimism about the interim deal.

An analyst said while the data reflected early days in the deal, it could show that Iran's buyers are getting more comfortable with exceeding the limits under sanctions.

"It's possible that Iran's exports will plunge below 1 million bpd this spring and summer, enabling the cap to be met," said Bob McNally, president of energy research group the Rapidan Group, who served as White House adviser to former President George W. Bush.

"But in my view, it is more likely that Iran's customers have seen the writing on the wall and concluded they can import more Iranian oil at lower risk of being sanctioned by the State Department." (Additional reporting by Jonathan Saul in London, and Timothy Gardner and Arshad Mohammed in Washington; editing by David Evans and Tom Brown)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Markets

REUTERS SHOWCASE

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi  Full Article 

Power Outage

Power Outage

Mumbai hit by power cuts  Full Article 

Commodities

Commodities

Gold imports, premiums to jump on festive demand - top refiner  Full Article 

Economic Worries

Economic Worries

Pakistan's promises to IMF in doubt as protests sap economy   Full Article 

Islamic Finance

Islamic Finance

Basel III deposit challenge looms over Islamic banks   Full Article 

Antitrust Probes

Antitrust Probes

U.S. business lobby says concerned China antitrust probes unfair.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage