The source, who spoke on the condition of anonymity as they were not allowed to speak publically about this, said that global buyers of Iranian crude will only be purchasing 1.94 million barrels per day (bpd) in March – a 21% drop on February’s sales.
This would make Iranian oil sales the lowest since March 2016, which is just after Iran was allowed to trade on the global oil markets again, after international sanctions were lifted under the nuclear deal.
When compared with March 2017, Iran is down a massive 26% despite being the third-biggest producer among the Organization of the Petroleum Exporting Countries (OPEC) and despite the Iranian Regime’s desperate attempts to entice customers, including reducing official selling prices and offering increased freight discounts to India.
Even in Asia, the market that the Iranian Regime has most targeted for oil exports, the bpd is dropping to 1.12 million this month, down by one-third from February, according to Reuters.
Meanwhile Japan, the fourth-biggest buyer of Iranian oil in Asia, will not buy any oil from Iran this month for the first time since March 2016. According to the confidential source, this is because Japan (and indeed the rest of the world) is not certain whether or not sovereign insurance for tankers carrying Iranian oil would be extended beyond March.
So why are Iranian exports so low?
A lot of it has to do with the existing US sanctions on the Iranian regime for issues like their ballistic missile programme and human rights abuses, along with the fear that the US will soon withdraw from the nuclear deal and reimpose all sanctions on Iran.
This makes any investment in Iranian oil risky, because the investor may soon have to choose between accessing that oil and accessing the US financial markets. This would lead most countries to choose the US.
It also affects the insurance companies that insure the shipments of oil from things like piracy and shipwrecks. These insurance companies don’t want to lose access to the US financial markets and, as highlighted by Japan, may choose to stop insuring Iranian oil tankers, which would leave the buyer at risk of losing their oil without any compensation.