Analysts suggest Iran’s oil exports could increase by up to 50 percent under the interim nuclear agreement, despite insistence from Obama administration officials that there is no significant relaxation of oil sanctions in the six-month deal.
The agreement allows Iran’s customers to purchase oil at their "current average amounts," waiving the current U.S. sanctions rule that requires these countries to "significantly reduce" their Iranian oil imports every six months. The deal also relaxes insurance and transportation sanctions, making it easier and less expensive for Iran to export oil.
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"The explicit if partial relaxation of crude oil sanctions [in the agreement] is unexpected and at odds with repeated official signaling that oil sanctions would be untouched in the interim deal," oil market analysis firm the Rapidan Group said in an email statement on Sunday.
Iran currently exports around 1 million barrels per day (1 mb/d), but the Rapidan Group said November exports will likely exceed that figure since some importers delayed their purchases in October. Analysts say countries like China could "test the limits" of how much oil they can import under the interim deal.
"This weekend's outcome strengthens our expectation that Iran's exports would tick up toward 1.5 mb/d during any interim deal," said the Rapidan Group.
"India and China are two countries to watch closely," the firm added. "China, the laggard in terms of achieving the ‘significant reductions’ required by US sanctions, may test the limits of the interim deal. India, meanwhile, has been hardest hit by the EU insurance ban on tankers carrying Iranian crude."
Oil futures dropped on Monday on the heels of the interim agreement. The Rapidan Group said the crude oil market could see a similar trend early next year.
"Looking to early 2014, the consequences would also be bearish if traders and importing countries test the limits of looser sanctions," said the firm.