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Analysis: Iran's oil exports down sharply in first-half August

Highlights

Initial data shows Aug 1-16 oil exports 1.68 mil b/d

Exports averaged 2.32 mil b/d in Jul

Demand from India slumps

Iran's refinery runs, floating storage expected to grow

London — Oil exports from Iran have fallen steeply in the first half of August, according to preliminary tanker tracking data, as the threat of US sanctions is already beginning to curb demand from some of the OPEC member's key customers.

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Initial estimates gathered from Platts trade flow software cFlow suggest that Iran oil crude and condensate exports have plummeted to 1.68 million b/d in the first 16 days of August, down over 600,000 b/d from loadings in July.

This compares with exports averaging 2.32 million b/d in July as a whole and 2.10 million b/d in the first 16 days, S&P Global Platts estimates show.

Sources said these preliminary numbers show key buyers of Iranian oil are starting to cut back ahead of looming US sanctions against Iran's oil sector.

Preliminary tracking data shows demand from India for Iranian crude has dived. cFlow data shows that 203,938 b/d of crude flowed to India over August 1-16, compared to 706,452 b/d in July.

US sanctions snap back on November 4 and analysts expect this to block up to 500,000-1 million b/d of Iranian crude exports. The fresh data shows an impact could be felt as early as this month.

There have been questions around India -- the second-largest buyer of Iranian crude -- which is under pressure from the US government to cut its reliance on Iran's oil.

This occurs as Indian refiners are dramatically stepping up their US crude purchases as questions loom over future buys from Iran and the trade war heats up between Beijing and Washington.

GASOLINE BOOM

Buying interest from China, Iran's largest oil customer, was only slightly reduced. Loadings to China from August 1-16 were 615,688 b/d compared to 722,100 b/d in July. Demand from Japan remained steady while for the second month in a row, South Korea halted its imports of Iran's condensates, of which it used to be a key buyer.

The Asian country has already started to find alternative supplies to Iranian condensates after pressure from the US.

Flows to Europe in the first-half of August were, however, up strongly, with flows at 631,814 b/d, compared to 465,450 b/d in July. Italian demand stayed strong and other buyers in this regions consisted of Turkey, Greece, France, Spain and Croatia.

But sources have said that despite a fall in exports, Iranian crude production is expected to not have fallen sharply, as Tehran has diverted some of these barrels to its domestic refining system.

Iran also has ample domestic storage which can absorb the barrels that fail to find homes. Previously, when the US and EU imposed sanctions on Iran, the country put almost 50 millions barrels of crude and condensates on floating storage between 2012 and January 2016.

Refinery runs in the country have been picking up in the past few months.

Iran's gasoline production has surged 50% over the last 12 months, with further increases to come, according to the oil ministry.

The boost in production comes from the Persian Gulf Star condensates refinery, which started up in April last year, after years of delays, using Iran's locally produced South Pars condensate as feedstock.

--Eklavya Gupte, eklavya.gupte@spglobal.com

--Jack Jordan, jack.jordan@spglobal.com

--Edited by Jeremy Lovell, jeremy.lovell@spglobal.com