Where Will The "New" Iranian Oil Go -- July 14, 2015

My hunch is that with regard to Iranian oil, not much is going to change very soon (except emotions) with regard to Iranian exports.

First of all, the deal has to be finalized, reviewed, and then acted upon. Second, Iran had waivers to sell a lot of its oil, and no doubt, skirted the sanctions and may have sold much more oil that we know, albeit with a bit of difficulty. Third, even if everything is worked out and everything is deemed to be hunky-dory, it will take some time to get Iran back up to full capacity.

Finally, there will be a lot of competition.

Who are the buyers of Iranian oil? Platts:

Iran sells most of its crude exports to four Asian countries: China, India, Japan and South Korea. With Turkey and Taiwan, these countries were buying Iranian oil under waivers from US financial sanctions granted in return for reduced oil purchases from Iran.

The deal struck July 14 would allow them to boost their purchases. That would mean the crude they’d been buying, from West Africa, Russia, the Caspian, the North Sea and Iraq, among others, could be looking for a new home.

Oil minister Bijan Zanganeh has said Asia will be Iran’s main target. That’s where oil demand is still growing, albeit more slowly than before. Europe, which took about 600,000 b/d before the sanctions hit, will also be a focus.

However, wherever Iran tries to sell its oil there will be challenges. Competition has increased everywhere, partly because lower US reliance on imported crude has sent former suppliers looking for new markets.

So, the losers are: West Africa (not unexpected); Russia (bad news); the Caspian; the North Sea (the latter two I know little about current status/production; and, Iraq (really bad news). It is interesting that Saudi Arabia was not mentioned as one of the losers.