In the days following the U.S. withdrawal from the Iran nuclear deal, Iran’s European customers continue to buy Iranian oil and are in no immediate rush to replace volumes, but some refiners and traders have flagged financing issues as having the potential stop to crude trade with Iran.
After the U.S. walked out of the Iran deal, the U.S. will be targeting Iran’s crude oil sales, and sanctions previously lifted under the deal will be re-imposed following a 180-day wind-down period, the U.S. Treasury said.
European buyers are not in an immediate rush to replace Iranian supplies due to that wind-down period, with sanctions expected to kick in in November. All buyers report that they are complying and will comply with any sanctions imposed on Iranian trade, and some of them expect that banking issues will arise from the sanctions, such as the availability of trade finance.
Marta Llorente, a spokeswoman for Spanish oil company Cepsa, one of Iran’s customers in Europe, told Reuters:
“At this moment, our trading activity is business as usual.”
Italy’s Eni also continues to buy Iranian oil and it is buying 2 million barrels of oil per month from Iran under a deal that expires at the end of the year.
“We’re doing nothing,” said the head of trading at another European customer of Iran’s. “It’s wait and see. If we’re forced to reduce, we will. Iranian is not the only crude,” the manager told Reuters.
Sources at trading companies tell Reuters that “It looks like you can still go on for six months,” but traders expect the banks to be the key in determining whether Iran’s customers in Europe can buy oil, and even if the U.S. grants waivers to European buyers, whether they will need to reduce their volumes during the wind-down period.
Outside Europe, one of Iran’s single biggest customers—China—has already reassured Tehran that it would continue to import its crude.
Amidst the still ‘wait-and-see’ mode in Europe—especially when financing crude oil trade is concerned—Iran says that its oil exports will not be disrupted by the re-imposition of sanctions.
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