Washington, DC — Iran's oil buyers have nine weeks to decide whether to halt the trades or risk getting banned from the US financial system for violating secondary sanctions that return November 5.
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Oil prices continue to be supported by the looming deadline and uncertainty about whether the US government will grant any relief to importing countries that have made major cuts during the six-month wind-down period.
Iran's exports have already started falling sharply as buyers source alternative supplies and halt loadings to allow time to complete deliveries before the sanctions take effect. August figures released next week will bring the supply impact into sharper focus.
HOW MUCH OIL WILL LEAVE THE MARKET?
**1.44 million b/d will leave the market by November, compared with April levels, according to S&P Global Platts Analytics. November exports of 1.47 million b/d would represent a drop of 874,000 b/d from July.
**1 million b/d will leave the market by year-end, said Joe McMonigle, an analyst with Hedgeye Risk Management and former Department of Energy chief of staff.
**1 million b/d of Iranian exports will disrupted by the end of September, according to UBS analyst Giovanni Staunovo. Another 500,000 b/d in cuts are possible in the fourth quarter, compared with April levels.
**600,000 b/d to 1.2 million b/d of Iranian exports are in jeopardy from the sanctions, according to Ed Morse, Citi's global head of commodity research.
**The estimates have increased since May, when many analysts expected the US to grant widespread waivers to countries that make significant cuts, as the Obama administration did in 2012-2015.
WHO WILL KEEP IMPORTING?
**The US continues to state the goal of cutting Iran's exports to "zero as quickly as possible, ideally by November 4," a senior State Department official said Thursday. "We are prepared to work with countries that are reducing their imports on a case-by-case basis," the official said.
**China and India will likely demonstrate partial compliance, given various strategic interests including the ongoing US/China trade talks and India's recent move to lock in term contracts for US crude exports. China may cut less than 20% of its Iran imports from April levels, S&P Global Platts Analytics predicts, while India may cut closer to one-third.
**Half of Iran's exports flowed to China and India in April, a share that increased to 60% in July, according to cFlow, Platts trade flow software. The share could rise to 70% by November, given their expected limited cuts compared to other countries.
**Europe will have near-full compliance, as companies with US exposure will not risk violating sanctions despite European politicians' opposition to the US withdrawal from the Iran nuclear deal. Europe accounted for less than 20% of Iran's April exports, which fell to about 10% in July, according to cFlow data.
**Turkey "appears defiant and insistent that it will continue its 175,000 b/d of imports," Citi's Morse said, although caution by some Turkish importers could reduce that volume to 150,000 b/d.
**Japan has received no assurances that it will receive a waiver despite concerted diplomatic efforts between Tokyo and Washington. Japan and South Korea will likely demonstrate full compliance, Platts Analytics predicts. The two countries accounted for less than 15% of Iran's April exports, which fell below 10% in July, according to cFlow.
--Meghan Gordon, firstname.lastname@example.org
--Edited by Jonathan Fox, email@example.com