July 15, 2015: European refineries were dependent on Iran’s crude oil before Western sanctions were imposed on the OPEC producer in 2012 over its covert bid to obtain nuclear weapons.
Iranian oil exports were nearly halved to just over 1 million barrels per day. Mediterranean refineries are once again gearing up to receive the deluge of Iranian crude oil once the Western sanctions are eased. It will ease prices and also give wider options for the refineries in the region.
A spokesman for Greece’s biggest refiner Hellenic Petroleum said that they will not be buying any crude before the sanctions are officially revoked. Iran has been a long-standing and valued partner and Iran’s return to the market is being welcomed by everyone.
How the sanctions will be eased is not clear, but Iranian officials indicate that they will pull all the plugs to regain its market share in Europe. Iranian crude once had 40% share in the European market.
Experts opine that Iran will increase its oil exports by up to 60% in a year. The market is already facing an oversupply of oil. For the refiners in the Mediterranean region, cheaper crude oil means higher profits.
Iranian oil accounted for a quarter of Hellenic’s crude oil imports before 2012 when it all stopped because of sanctions.
Preliminary talks are already in progress between European buyers and the National Iranian Oil Company (NIOC) officials in Europe and Tehran in anticipation of the easing of sanctions. The buyers include Italy’s Eni and Saras.
Spain’s Compania Espanola de Petroleos (CEPSA) said that Iranian crude was a part of its supply, and they had a long and fruitful commercial relationship.
Asian buyers like China and India have continued to buy Iranian oil though in limited quantities in recent years. Iranian exports are expected to rise and reach 300-400,000 bpd, of which 150,000 bpd is expected to reach Europe.