Iran’s observed crude flows drop below 200,000 bpd

Observed crude flows from Iran dropped to 190,000 bpd in the first half of June, less than a tenth of the volume shipped in early 2018, after the US toughened sanctions on the country’s oil exports.Sanctions waivers that had applied to nations including China and South Korea weren’t renewed in early May, prompting both a slump in cargoes observed in tanker-tracking compiled by Bloomberg and an increase in the number of vessels that aren’t submitting position signals. Iranian flows had reached a post-sanctions high of 2.8mn bpd in April 2018, immediately before US President Donald Trump announced the US pullout from the Iran nuclear accord.Iran was Opec’s third-biggest producer when the Trump administration imposed a further round of sanctions in November last year. Eight countries – China, India, South Korea, Japan, Turkey, Taiwan, Italy and Greece – were initially permitted to continue buying reduced volumes of Iranian crude and condensate, a form of light oil extracted from gas fields. Those waivers expired in early May.The observed flows may only represent a part of Iran’s actual oil shipments, as vessels representing more than 70% of the capacity of the country’s tanker fleet haven’t transmitted position signals for more than a week. That is plenty of time for those ships to have taken on cargoes.However, there are still four Iranian-owned tankers that have been anchored off China for several week waiting to offload their cargoes, which suggests that the country’s appetite for Iranian crude may have waned. Japan, India and South Korea all halted purchases of Iranian oil before the waivers expired in May and there is no sign that they have sought to circumvent sanctions since then.Two Iranian tankers did resume sending position signals this month. The VLCC Horse, capable of carrying about 2mn barrels of crude, reappeared in the Strait of Malacca, signalling China as its destination. The Suezmax tanker, Silvia I, which can haul 1mn barrels, appeared off UAE’s Fujairah in the Gulf of Oman, where it is now anchored, after disappearing in early May while entering the Arabian Gulf. The tanker’s draft, its depth in the water, indicates that it has a full cargo on board.Several tankers that loaded cargoes of crude in May stopped sending signals after passing through the Suez Canal into the Mediterranean Sea. The only countries in the region that have been receiving deliveries of Iranian crude since the US sanctions snapped back into effect were the likely destination for oil carried on any such vessels.While the reimposed sanctions have not yet had the intended effect of driving Iran’s oil exports to zero, the observed flows of crude and condensate, are dwindling.