* China's Iranian imports fall by quarter, Japan by a third
* Saudi, Venezuela, Russia boost sales, eat into Iran's
* Iranian exports will remain under pressure as sanctions
By Manash Goswami
SINGAPORE, July 31 The sanctions reducing Iran's
oil exports have played in the favour of major producers such as
Saudi Arabia, Russia and Venezuela which now export about 21
percent more crude to Asia's biggest buyers compared to a year
Iran's exports to China, Japan, South Korea and India have
fallen by a third in the first six months of the year as EU and
U.S. sanctions made it difficult to pay for the crude and find
insurance cover for tankers. The United States is also
finalizing even tougher sanctions to restrict Iran's oil
As Iran's oil sales declined, the world's top oil exporter
Saudi Arabia, Russia and other OPEC producers Venezuela and
Angola ramped up their sales to Asia's top oil consumers, where
refiners can pick and choose from a variety of supplies in a
market flush with crude.
Asia is the region where oil demand is growing, as the U.S.
economy teeters on recession and Europe tries to stem its
"We have seen that refiners have successfully replaced
Iranian crude with other crudes," said Sushant Gupta, an analyst
at Wood Mackenzie. "There is no pressure from the supply side."
Western powers are trying to force Iran to abandon a nuclear
programme they believe is designed for building weapons. Tehran
says it needs the technology to generate electricity.
Japan, South Korea and India all cut imports from Iran to
gain a waiver from the U.S. sanctions which threaten to cut off
institutions dealing with Iran from the U.S. financial system.
China was also awarded a waiver after cutting its imports
from Iran due to a dispute over contract terms earlier this
year. The EU ban on insuring any Iranian oil shipments also
hindered China's imports from Iran.
IRAN EXPORTS MAY NOT DECLINE FURTHER
In the first half of the year, Saudi Arabia boosted sales to
the top four Asian buyers by 15 percent year-on-year to 3.8
million barrels per day (bpd).
During the same period, Venezuela's year-on-year exports
also jumped 42 percent to 596,000 bpd, followed by a 36 percent
year-on-year increase in shipments from Russia to 682,000 bpd.
Volumes from Angola have risen 24 percent year-on-year in
the first six months to 994,000 bpd and 26 percent from Kuwait
to 938,000 bpd.
China, Asia's top oil consumer and the world's second
largest, appeared to favour Russian crude in its purchases
during the first six months of the year.
China cut Iranian imports by 20.5 percent during that period
to 429,873 bpd, and Chinese data showed it replaced that amount,
as well as an additional 11 percent, by imports from Saudi
Arabia, Angola and Russia.
Russian imports recorded the biggest increase of 44 percent
over the same period a year earlier, followed by Angola's 35
percent and Saudi Arabia's 16 percent.
Japan's purchases from Iran for the first six months fell
33.4 percent from a year earlier to 227,573 bpd, with Saudi
Arabia, Russia, Oman and Kuwait filling in the gap.
The 17 percent fall in purchases by South Korea from Iran
was filled up by Saudi Arabia, Kuwait and Qatar.
Only India, Asia's third-largest oil consumer, has posted an
increase in Iranian imports. Shipments in the first six months
have risen 3.9 percent as India stepped up purchases ahead of
the EU sanctions, which took effect on July 1.
Some industry analysts believe Iran's exports to Asia may
not fall further as all four buyers find ways around the
sanctions while keeping import volumes low to keep on qualifying
for the U.S. waiver.
Japan has agreed to provide sovereign guarantees to vessels
owned by its shipping companies to transport Iranian oil, while
China and India are asking Iran to ship the crude on its own
tankers and taking on the risk. South Korea has said that it may
resume imports from Iran soon.
"The third quarter will probably be the worst for Iran. We
expect production to fall further, but production may improve
from the fourth quarter as buyers revive purchases," said Gupta
at Wood Mackenzie.
(Editing by Miral Fahmy)