Asian refiners, traditionally big buyers of Iranian oil, are keen to resume imports from Iran if there is an agreement to revive a 2015 nuclear deal, which could pave the way for more supply on global markets and soften prices.
Most Asian buyers halted Iranian oil imports in 2019 after former US president Donald Trump withdrew from the nuclear deal with Iran and re-imposed sanctions on Tehran’s oil exports.
But indirect talks between Iran and the US on the nuclear deal resumed last week and last month China’s customs reported the first import of Iranian crude in a year.
Western diplomats have indicated they hoped to have a breakthrough by now, but tough issues remain unresolved.
Oil prices are at their highest in more than seven years as fears of disruption in Russian energy supplies have boosted Brent and West Texas Intermediate crude futures.
Refiners are also paying record spot premiums for crude produced in Europe and the Middle East as producers struggle to meet a robust recovery in demand after the pandemic.
Talks on Resuming Imports
With the prospect of a new Iran deal, South Korea, previously one of Tehran’s leading oil customers in Asia, said on Wednesday it had held working-level talks on resuming imports of Iranian crude oil and unfreezing Iranian funds.
A major South Korean refinery is watching the developments at the nuclear talks, a company source said, as Iranian crude oil is cost-competitive and easy to process compared with other grades such as Mexican oil.
“As long as the two countries decide to resume oil trade, we can purchase crude from Iran,” this source said. “Since we’ve previously used crude oil from Iran, we don’t need to test the oil at our facilities,” he added.
Japan’s top refiner Eneos Holdings Inc will consider resuming oil imports from Iran if an agreement to revive a 2015 nuclear deal is reached, its chairman said on Thursday.
“We have not begun such preparations yet, but we will consider resuming imports of crude oil from Iran as one of our procurement options if an agreement over the nuclear deal is reached,” chairman Tsutomu Sugimori told reporters.
It will take two or three months to resume oil imports from Iran, if and after such an agreement on the nuclear deal is made, as the refiner will need to make various arrangements such as insurance and shipping, Sugimori said.
A refiner from India, Iran’s No. 2 customer, is in talks with Iran for sourcing its oil, an Indian refining source said, adding that it was also waiting for more clarity on the nuclear deal. The sources declined to be identified due to sensitivity of the matter.
Iran has kept some exports flowing despite sanctions as intermediaries find ways to disguise the origins of the imports and China, Iran’s biggest customer, has been a big destination.
- Reuters, with additional editing by George Russell
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