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Iran has imposed an immediate ban on soybean and sunflower oil imports, according to multiple media outlet reports on Oct. 10.

The reports cited a letter written to the Iran Customs Administration from the agriculture ministry's deputy for commercial development on Oct. 9.

According to the state Fars news agency, the letter says, "Considering the necessity of planning to adjust and regulate the edible oil market, the clearance of crude sunflower oil and crude soybean oil is not allowed from Oct. 23 from all executive customs offices of the country until further notice."

The reason behind the purchase ban was not clear -- whether it was caused by an oversupply of oil in the market and to prevent further price reduction. Iran imports 90% of its edible oil needs. However, the officials of the agriculture ministry have announced a 15% drop in vegetable oil prices in market.

Market Impact

The news has already imparted bearish sentiment to regional sunflower oil market. Sunflower oil offers for delivery to Turkey fell $25/mt on the day to $820/mt CIF Mersin on Oct. 10 following news of the ban.

The ban is further expected to lead to an excess supply of vegetable oil from Russia, particularly sunflower oil, in the global markets. Russia typically exports about 40,000 mt of sunflower oil to Iran monthly.

"The import ban may further pressure down sunflower oil prices in the market, we expect the Iranian import ban to further push down prices even below the level of $800/mt," a trade source said.

However, market sources were uncertain about the duration of the import ban.

"We can't predict how long this ban will last because Iran often changes its policies without clear justifications," another trader said. "They may choose to reverse this decision promptly or maintain it until local stocks have decreased."

Russian Supply

The move by Iran, one of the major buyers of sunflower oil from Russia, is expected to boost supplies global, dampening prices for other destinations. Moreover, abundant and increased sunflower oil supply from Russia is further estimated to pressure prices in coming months.

According to the Russian Interfax news agency, Russia supplied 404,000 mt of sunflower oil to Iran in the current season -- September 2022 to July 2023 -- up 70% year on year.

Also, Russia is set for a second record sunflower oil export season in 2023-24, at 4 million mt, according to the Oil and Fat Union of Russia. The country exported a record 3.85 million mt of sunflower oil during the 2022-23 season (September- August) which was up 26% on the year, the union said in a report.

According to the forecast of the US Department of Agriculture, in the 2023-24 season, sunflower oil production in Russia will increase to 6.36 million mt against 6.3 million mt in 2022-23, and its exports will increase to 4.1 million mt from 3.95 million mt.

Iran is expected to import 1.64 million mt of vegetable oil in MY 2023-24 (September-August), up 35% from the 1.21 million mt imported in 2022-23, the US Foreign Agricultural Service said in its September oilseeds report.

Platts assessed sunflower oil FOB Black Sea $6/mt lower on the day on Oct. 10 to $734/mt, as lower offers were available in market.

Platts is part of S&P Global Commodity Insights.