Embargo Lifted, Iranian Oil Reaches Europe

Iranian oil attained a new level of restored legitimacy Monday, with word that a tanker anchored near a Spanish refinery had begun off-loading the first shipment for Europe’s consumption since the lifting of a 2012 European Union embargo.
Shana, the official news service of Iran’s Oil Ministry, said the tanker, the Monte Toledo, an 890-foot vessel registered in Portugal, had started transferring the Iranian oil to the refinery of Compañía Española de Petróleos, in Algeciras, a southern Spanish port near Gibraltar.
The news, first reported Sunday by Bloomberg, came as President Hassan Rouhani of Iran and other top Iranian officials asserted that the country was regaining its share of the market in crude oil, forfeited when the European oil embargo and other Western sanctions were intensified years ago in response to Iran’s disputed nuclear activities.


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Many of those sanctions, including the European embargo, were terminated or suspended under Iran’s international agreement with major world powers to restrict its nuclear work. The agreement was completed in July and officially took effect in January.


The embargo denied Iran one of its most important markets for crude oil: Europe once accounted for purchasing roughly 400,000 barrels of Iranian crude a day. Other Western penalties, including banking and insurance restrictions, severely limited Iran’s ability to sell oil elsewhere.
“We have to return to the role we used to have in the export of oil, and we are, step by step, achieving it,” Mr. Rouhani said in Tehran on Sunday, according to Iran news media accounts.
The nuclear sanctions on Iran also helped to cultivate a culture of corruption in the country, in which sanctions evaders could profit enormously. As if to punctuate that point, an Iranian court on Sunday sentenced a wealthy business executive, Babak Zanjani, and two associates to death for corruption tied to oil sales during the tenure of President Rouhani’s predecessor, Mahmoud Ahmadinejad.
Iran produced roughly 3.6 million barrels a day before the nuclear sanctions, but dropped to roughly 2.8 million barrels a day in recent years. Exports of roughly two million barrels a day fell by half.
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Industry data has suggested that production has rebounded strongly since the sanctions were officially lifted. Bloomberg reported that Iranian production rose to three million barrels per day in February, the highest since July 2012.
Mr. Rouhani and his economic minister, Ali Tayebnia, have said Iran hopes to return to presanction levels of oil exports in the coming months.
Iran’s re-entry in the international oil market has come amid a price collapse caused in part by China’s economic weakness, a reduced American need for energy imports, a global supply glut and unrestrained production by other major exporters, led by Saudi Arabia. The Iranians have said they intend to sell as much oil as they can, regardless of the price.
Despite a recent willingness expressed by the Saudis and a few other major producers, notably Russia, to freeze production at January 2016 levels, the Saudis have also ruled out the possibility of production cuts, especially when the Iranians, their regional rivals, are so intent on producing.
Global oil prices plummeted to less than $30 a barrel in January, the lowest level since 2003. They have rebounded somewhat, and were trading in the mid- to high $30 range on Monday, with some forecasters talking about $50 a barrel if world demand improves. But it remains unclear whether the market has started a long-term strengthening trend.