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US sanctions on Iranian oil impeding foreign investment, slowing product exports: official

US sanctions on Iran’s oil exports have caused revenue losses for Iran exceeding $50 billion, severely hindered the country’s push to expand refined-product exports, and ended foreign investment in its energy sector, Brian Hook, the US State Department’s special representative for Iran, said Thursday.

“Both upstream and downstream investments in Iran’s oil and gas sector have stopped,” Hook said at the Council on Foreign Relations, according to the prepared remarks provided by State. “Foreign investors have almost entirely pulled out of Iran due to the risks and billions in investment has been lost.”

The speech highlighted the impact of US sanctions on Iran’s economy since all oil sanctions waivers were lifted in May and, Hook said, oil sanctions have become “the core of our economic pressure,” and driven Iran oil exports to levels as low as the start of the Iran-Iraq War in 1980.

“Oil export revenues typically comprise at least 30% of Iran’s revenues,” Hook said. “Our sanctions are bringing this figure closer to zero.”

Iranian oil exports, which averaged more than 1.7 million b/d in March, fell below 500,000 b/d in August, September and October, based on estimates compiled from S&P Global Platts trade-flow software cFlow and shipping sources. Exports 400,000 b/d in October with similar levels expected in November, according to preliminary Platts estimates.

“Iran’s oil exports have decreased by more than 2 million barrels per day, driving down Iran’s revenue from oil by more than 80 percent,” Hook said.

Hook said that Iran’s revenues have fallen by more than $50 billion since May 2018 and are currently falling at a rate of $30 billion per year.

Hook said, with the loss of “legitimate” buyers, Iran has been increasingly falsifying export documents and turning off AIS transponders on ships, efforts he said the US was working with other countries and the maritime and energy industries to curb.

Hook said Iran is “running out of options” to store oil now subject to US sanctions and is trying to boost its export of refined products, due to the increase in crude and condensate it is sending to domestic refineries and petrochemical facilities. But there are “serious logistical constraints,” since so many Iranian tankers are being used as floating storage and unavailable for transport.

Hook said US sanctions on Iran’s oil exports were imposed to compel negotiations between the US and Iran, but Iran will only agree to talks with the US if the US agrees to ease sanctions on 700,000 b/d of Iranian oil exports, according to analysts with Rapidan Energy Group.

Many analysts believe that some sanctions relief will need to be offered in order for talks to begin, but Hook has said that is a position the Trump administration is not considering.

“The United States is not looking to grant any sanctions relief until we have a final deal with the Iranian regime that addresses the range of threats they present to peace and security,” Hook told Platts last month.
Source: Platts

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