DUBAI (Reuters) - Iran’s nuclear deal with the West will make it easier, cheaper and less stressful to trade its oil, thanks largely to a partial lifting of the European shipping insurance ban, a senior Iranian industry official said on Tuesday.
Iran and six world powers reached a deal on Sunday to curb Tehran’s nuclear program in exchange for limited sanctions relief, including a pledge to allow some Iran oil shipments to be covered by UK-dominated providers of shipping insurance.
U.S. and European Union (EU) sanctions that have slashed Tehran’s oil exports from 2.5 million barrels per day (bpd) to around 1 million bpd remain in place and Washington has said that it will not allow exports to rise above current levels.
“Based on this deal, Iran’s crude oil exports will not decline and our customers will be able to purchase oil from Iran without any anxiety and they will not have to look for alternatives,” Ali Majedi, deputy minister for international affairs and trading, told oil ministry news service Shana.
“No new sanctions will be slapped on Iran’s oil industry in the coming six months and our customers can clinch term contracts with Iran instead of spot oil consignments purchased from National Iranian Oil Company.”
Western pressure on Iran’s customers to find other suppliers has prompted a surge in Saudi oil sales over the last year.
Washington’s pledge not to pursue deeper cuts to Iran’s exports over the next six months and the prospect of some shipments getting EU insurance coverage, comes as a welcome and rare relief for Iran’s battered oil-based economy.
In addition to having to reduce their purchases to get waivers from U.S. sanctions, Iran’s big oil customers have been put off importing even permitted volumes because they were unable to access the competitive shipping insurance market dominated by European companies.
“Iran crude oil exports costs increased because, besides us, our customers had also to pay more to insure crude oil cargoes,” Majedi was quoted as saying.
“Based on the action plan signed between Iran and P5+1 (group of world powers), the European Union’s insurance sanctions against oil tankers carrying Iran’s oil have been lifted so crude oil exports will be done more easily, at lower costs and within the framework of international regulations.”
The joint action plan posted by the European Union and U.S. governments says the West has agreed to freeze plans to further reduce Iran’s crude oil sales and allow its customers, led by India and China, to import their current average volumes.
EU and U.S. sanctions on associated insurance and transportation services will only be suspended for oil sales up to current average levels, the document says.
The U.S. and EU decision to suspend sanctions associated with Iran’s lucrative petrochemical exports is also a big boost from the nuclear deal.
“Since petrochemical exports make a major share of Iran’s non-oil revenues, the lifting of sanctions on this industry will increase hard currency revenues for the state-run and private sectors,” he said.
Joint Plan of Action:
Graphic on Iran’s oil exports to Asia:
U.S. fact sheet on deal with Iran:
Reporting by Daniel Fineren, editing by William Hardy