Iran Announces London Oil Conference in February

Iran announced today that it will hold an oil and gas conference on 22-24 February in London to attract major international oil companies to invest in Iranian oil and gas projects post sanctions. Iran also said it will publish the terms of post-sanctions oil contracts at a conference in Tehran on 21-22 November. The new terms are said to remove obstacles for oil majors to invest in Iran.

Iran Oil Exports Falling for Third Consecutive Month

Hitting a Low of 820,000 bpd

Iran’s oil exports fell for the third month in a row, reaching an average of 830,000 barrels a day, Reuters reported today. The slide in oil exports is continuing in spite of significant discounts offered by Iran to its Asian customers, China, India, Japan and South Korea, which together are buying 720,000 bpd of Iranian crude, or nearly 90 percent of the country’s exports.

China, Iran’s biggest customer, is purchasing 370,000 bpd, the lowest volume in a long time. India, the second biggest customer, is purchasing only 170,000 bpd, 20 percent below last month’s level, followed by Japan and South Korea at 100,000 and 80,000 bpd respectively.

File photo: Iran's oil export terminal at Kharq Island in the Persian Gulf (Getty)

Iran Says It can Boost Oil Output Just Days After Sanctions End

Iran’s Oil Minister Bijan Zanganeh said today in an interview with state TV that Iran can boost oil production “in one week” after international sanctions are lifted. He said production could increase by 500,000 bpd within a week after sanctions and by 1 million bpd within a month following that. Zanganeh warned that OPEC’s refusal to accommodate Iran in export markets would result in lower crude prices. (IRNA/Bloomberg, 2 August)

“Our lost share of market, which was about 1 million barrel a day, will manifest itself,” Zanganeh said. Even if crude prices fall, Iran’s (oil export) revenues will stay the same because exports are due to double, he added. (Shana/Bloomberg, 2 August)

Iran produced an average of 2.85 million barrels a day in July compared with 3.6 million at the end of 2011 when oil and banking sanctions went into effect. The Iranian oil exports declined to 1.4 million bpd after sanctions compared to 2.6 million bpd in 2011.

“Some of the most effective sanctions with regard to the oil industry were those targeted aspects such as sales, volumes, shipment, insurance and the transfer of the money,” Zanganeh said. “If those issues are resolved, Iran will regain the market share that it has lost which amounts to more than one million barrels a day.” (IRNA/Press TV, 2 August)

Amid surplus crude supply, the global benchmark Brent crude fell about 50 percent last year and dropped 2.1 percent on Friday to $52.21 a barrel on the London-based ICE Futures Europe exchange.

File photo: Iran’s Oil Minister Bijan Zanganeh (Atta Kenare/AFP/Getty Images/Bloomberg)

Iran Accounts for $86 Billion Unblocked under JCPOA

Frozen Cash Previously Estimated at More than $100 Billion

Central Bank of Iran Governor Valliollah Seif told state TV on Saturday that JCPOA, the nuclear agreement with world powers, would only unlock $29 billion in Iranian assets in overseas banks. (IRIB, 25 July)

Iran had previously said more than $100 billion of its foreign exchange funds were blocked in overseas banks due to U.S. and EU sanctions, an estimate widely accepted by outside experts. Seif added, however, that out of the total assets held overseas, $35 billion is already allocated for oil projects and $22 billion will be held in Chinese banks as security deposit guarantee for buying goods from China.

The sum of the three figures disclosed by CBI governor, the $29 billion available plus $35 billion earmarked for oil projects and $22 billion kept in China, if all accurate, adds up to $86 billion. Based on the more than $100 billion in total assets frozen, CBI estimates leave more than $14 billion unaccounted for.

It was not clear if Iran has also earmarked part of the foreign exchange that would be available under JCPOA to its military interventions in Iraq, Syria and Yemen, as it has done the same for its future oil projects. And if the cash unaccounted for could be allocated to those foreign operations beyond the current budget.

Iran Not Worried about Oil Market

Storing 40 million Barrels of oil at Sea in Anticipation of Nuclear Agreement

Iranian Oil Minister Bijan Zanganeh has told German daily Tagesspiel in an interview that Iran is not worried about the market for sale of its oil when it raises output if it reaches a nuclear deal with the West.

“The situation is favorable for us, because in Iran and Middle East, the cost is less than $10 (per barrel). That’s why we’re not worried about the market,” Zanganeh said. (Iran Daily, 16 June)

The global market is currently facing a supply glut. Ample supplies are expected to continue in near term, outweighing geopolitical concerns about the conflicts in the region. Prices are expected to be restrained despite seasonal demand increases as Saudi Arabia and other key producers maintain high oil output to maintain their market shares. Brent crude oil price was at $63 today.

Iran is storing as much as 40 million barrels of crude oil on supertankers at sea in preparation of a nuclear deal.

“The first thing (we) will try and do is to offload quite a lot of storage… we are going to sell this oil at any price,” said Mehdi Varzi, a former official at the state-run National Iranian Oil Company. “Floating storage is there to be put onto the market as soon as possible after some sort of agreement.” (Reuters/Trade Arabia, 16 June)

Shipping sources and tanker tracking data on Reuters showed over the past three months Iran had deployed at least 15 very large crude carriers (VLCCs), each capable of two million barrels, to store oil. The approximate 38 million barrels of Iranian crude in floating storage, in addition to shore-based stocks, could quickly add supply to the market. (Reuters, 16 June)

Under the current interim nuclear agreement, JPOA, Iran exports approximately 1 million barrels a day. Oil Minister Zanganeh has said Iran would pump another 500,000 within a month of lifting of sanctions and up to 1 million bpd within six months. Most analysts believe it will take more time for increases at those levels.

File photo: Iran’s main oil export terminal at Kharq Island (Getty Images)

Iran: Russia Set to Start Oil-for-Goods Deal

Iranian Oil Minister Bijan Zanganeh told reporters in Vienna that Russia may start importing crude oil from Iran next week as part of an oil-for-goods agreement.

“We hope that next week Russia will take (its first imports),” Zanganeh said after attending a meeting of OPEC. “Much of this will be for cash and we will be using this money to buy commodities from the Russians.” (Bloomberg, 6 June)

Zanganeh said he discussed the deal with his Russian counterpart Alexander Noval in Vienna on 3 June. Zanganeh added, however, that Russia plans to buy “much lower than 500,000 bpd,” a figure that had originally been agreed two in the now-famous oil-for-goods deal. He did not disclose the amounts of first and subsequent deliveries to Russia.

Iranian oil exports dropped 50 percent since oil and banking sanctions were imposed in 2011. The agreement with Russia was to compensate for lost exports.

Russia Unable to Sell Iran Oil

Questioning Viability of Oil-for-Goods Barter Agreement

Iran said today that Russia has not been able to sell any of its crude oil cargoes. The announcement questions the viability of an oil-for-goods barter agreement that has been signed between Iran and Russia.

“The problem with the barter agreement with Russia is the fact that it has not been able to sell any Iranian oil cargoes,” said Mohsen Qamsari, the deputy director of National Iranian Oil Company (NIOC). “Russia should be first able to market Iran’s oil so that Iran could provide it with [additional] crude.” (Press TV, 9 May)

Under the barter deal, Russia was to purchase 500,000 barrels of crude oil per day from Iran in exchange for millions of tons of Russian goods a year.

State of Iran’s Oil Industry ‘Catastrophic’ – Oil Minister

Iranian Oil Minister Bijan Zanganeh told Majlis, the Iranian parliament, that the current status of Iran’s oil industry is “catastrophic,” with no money for key oil projects.

Zanghaneh said the falling oil prices have drained his ministry’s revenues to an extent that “no cash is currently available for the oil industry’s crucial investments.”

“The Oil Ministry has come across problems in paying the salaries of its own staff, let alone making (crucial) investments in shared fields,” Zanghaneh added. (Press TV, 16 February)

“The current situation of the oil industry is catastrophic,” Zanghaneh said. “If the clause (allocation of $4.8 billion from national sovereign fund to oil ministry) is not approved, we will fall into a real crisis.”

The proposal for allocating $4.8 billion from National Development Fund to Oil Ministry, however, failed to get enough votes in the Majlis and did not pass. It was forwarded to a Majlis committee for further discussions, Press TV reported.

File photo: Iranian Oil Minister Bijan Zanganeh (Press TV)

Iran Lowers Oil Price for Budget to $40

Iran’s Minister of Finance and Economy Ali Tayeb-Nia announced today that Iran is revising its draft budget to assume an oil base price of $40 a barrel. The Iranian calendar and fiscal year begins on 21 March. Tayebnia added that in order to cope with falling revenues, the government will have to halt some projects. (Fars News Agency/Bloomberg, 15 January)

President Rouhani had presented a budget based on $72 oil to the parliament only on 7 December. That’s the budget that is now being revised to account for a $40 oil.

The price of Brent crude has fallen by 54 percent in the past year, forcing governments across the Persian Gulf to reduce spending, including cuts for subsidies on petroleum products and capital budgets. On Wednesday, Qatar Petroleum and Royal Dutch Shell called off plans to build a $6.5 billion petrochemical plant.

“Most Gulf countries are pricing $50 oil for 2015,” said Naeem Aslam, chief market analysts at Dublin-based Avatrade. “ (And) creditors want to be sure they recoup their money so there could be hesitation to starting up new projects.” (Bloomberg, 15 January)

Meanwhile, Brent futures price fell by 2% on Thursday and finished at $47.67. 

Photo credit: Iran’s Minister of Finance and Economy Ali Tayeb-Nia, center, announced revision of government’s proposed budget to account for a $40 oil.

Sanctions Cost $100 Billion in Oil Revenues

Secretary of Expediency Council Mohsen Rezaie said today that sanctions over the past three years caused $100 billion damage to Iranian oil revenues. He added that oil prices at $50 per barrel would cause another $100 billion loss in revenues over the next three years.

Rezaie made the comments in a groundbreaking ceremony for a petrochemical complex in Masjed Soleiman, Khuzestan, which will be built by the Chinese. (IRNA, 11 January)

File photo: Iran's oil export terminal at Kharq Island (Getty Images)

Venezuelan President in Tehran

Venezuelan President Nicolas Maduro arrived in Tehran today looking for Iranian financial help to save its economy with oil prices plunging to $50 per barrel. Oil constitutes 95 percent of Venezuelan hard-currency export earnings. With prices so low, Venezuela is facing serious problems paying for its sizeable social projects, and the country is at risk of financial default in the coming months.

Maduro is on a tour to Russia, China, Iran, Saudi Arabia and Algeria looking for help. Aside from China, all the other countries he’s visiting are dealing with falling oil prices.

Iran and Russia have to face $50 oil on top of economic sanctions imposed on them because of nuclear and Crimean issues respectively. Iran is losing more than $2 billion a month in export revenues compared to last June when oil was at $114. The Iranian and Russian economies could be facing recession, currency crisis, and runaway inflation. How they could help Venezuela was not clear. China can and is buying large volume of crude from Venezuela at rock-bottom prices.

Photo credit: Venezuelan President Nicolas Maduro (l.) being greeted by Iranian President Hassan Rouhani during his official arriving ceremony at Saadabd Palace in Tehran; Saturday 10 January 2015 (Twitter @Rouhani_ir)

Iran Offers Deepest Oil Discount in 14 Years

Brent Plunges below $60

Bloomberg reported today that Iran was offering its main crude grade to customers in Asia at the deepest discount in 14 years. National Iranian Oil Company (NIOC), taking a cue from Saudi Aramco, cut its official selling price for January shipment of light crude to a discount of $1.80 a barrel below the regional benchmark. Bloomberg said light crude grade hasn’t sold at such a deep discount since it began tracking the country’s official selling price in March 2000. Iran also deepened the discount for Iran Heavy crude to $3.51 a barrel for January delivery to Asian customers, deepest discount since December 2008.

Meantime, the Brent crude price plunged today below $60 a barrel mark, trading at $59.07 - Crude has fallen 45 percent this year, amid strong signs that OPEC is reluctant to tackle the glut. UAE’s energy minister said on Sunday that OPEC will refrain from cutting output even if oil prices fall as low as $40 a barrel.

In Russia, the dramatic central bank decision in wee hours this morning to raise the interest rate to 17 percent failed to slow down the fall of the ruble. In fact ruble dropped to new lows today, trading above 70 rubles to the dollar. The national currency has lost half its value in less than 6 months.

Iran: No Oil Swap Deal in Place with Russia

Oil Glut, Plummeting Prices Probably Killed the Deal

 

Iranian Oil Minister Bijan Zanganeh said today there is no oil-for-goods deal currently in place between Iran and Russia. (UPI, 11 December)

In January, the two countries announced they were negotiating an oil-for-goods swap worth $1.5 billion a month, allowing Iran to raise its oil exports substantially. The deal, exporting 500,000 barrels a day of crude to Russia in exchange for Russian equipment and goods, could have violated the exiting oil sanctions against Iran.

As late as November, however, the Kremlin was saying that it planned to sign contracts to deliver grain and possibly industrial products to the Iranians in exchange for oil. The recent oil glut and plummeting of global oil prices would probably have made the deal unworkable, as re-selling that much of Iranian crude in this market would not have been easy.

Iran: Fall in Oil Prices is ‘Treachery’ - UPDATE

Iranian President Hassan Rouhani said today that the sharp fall in oil prices is the result of “treachery,” in an apparent reference to Saudi Arabia and GCC countries, which opposed production cuts to lift prices.

Rouhani made the comments at a Cabinet meeting in Tehran. He added the fall in prices is “politically motivated” and constitutes a “conspiracy against the interests of the region, the Muslim people and the Muslim world.” (IRNA/AP, 10 December)

“The people of the region will not forget such conspiracies, or in other words, treachery against the Muslim world,” Rouhani said.

Meantime, the Brent crude is trading at $64.24 today, a fall of more than 40 percent since June.

UPDATE: Iranian VP for Strategic Planning Mohammad Bagher Nobakht said on Wednesday that even if the oil drops to $40, Iran can mange its affairs.

Note: This blogger believes that countries do survive (even Somalia). The question is, How and at what level of development? Iran's economic development unfortunately has been directly tied to oil revenues. A price drop to $40 will have serious implications for the country, especially when it's fighting in two conflicts. The VP of strategic planning should know that; unless his comments were bravado more than substance.

File photo: Getty Images

Venezuela Oil Minister in Tehran

Venezuelan Oil Minister Asdrubal Chavez arrived in Tehran on Monday for talks with Iranian Oil Minister Bijan Zanganeh and other ministry officials on oil price crisis. In last OPEC meeting on 27 November, Venezuela pushed hard to curb output to stop the decline in prices, but OPEC decided to maintain current production ceilings.

Low oil prices have particularly hit Venezuela hard, with the country on the brink of financial default.

Meantime, Brent crude prices hit five-year low on Monday. Today, Brent futures rebounded a bit, but still trading at $66.44 a barrel for January delivery.

Photo credit: Iranian Oil Minister Bijan Zanganeh (r.) greeting his Venezuelan counterpart, Asdrubal Chavez; Tehran, 8 December 2014 (FNA)

Brent Falls Below $70

Brent crude fell below $70 on Wednesday after a report suggested that the Saudis expected still lower prices for oil, Reuters reported.

The Wall Street Journal, citing people familiar with the situation, reported on Wednesday that Saudi Arabia, OPEC’s biggest oil producer, believed crude prices could stabilize at around $60 a barrel. Brent was trading at $115 a barrel in June.

Brent today finished up at $68.38 a barrel.