“Economics is a matter for donkeys. Our people made the revolution for Islam, not for melons.” Ah, if only Ayatollah Khomeini could have seen the fruit of Iranian negotiations over sanctions relief. Two aspects of the interim nuclear deal signed over the weekend should stop Iran sliding much further down the ranks of crude exporters, even if its average sales of oil cannot increase much above 1m barrels a day in the next six months, under western pressure.
First, the top four Asian buyers of Iranian oil are now unlikely to cut imports severely in the final weeks of the year. China, South Korea, Japan and India are meant to continue cutting purchases in order to retain a waiver from US sanctions. A burst of late-year compliance meant Iran’s sales last month were its lowest in almost two years. But given the diplomatic priority to get a final nuclear deal, the US state department is unlikely to press either Iran – or its Asian customers – too hard on waivers. It is going to be trickier for rival Gulf producers to market oil in Asia.
Second, the deal’s terms allow shipping insurers to resume business in Iranian crude cargoes. Up to 37m barrels of the stuff floated unsold in Iranian oil tankers in October, says the International Energy Agency. It will not all rush out in a newly insured wave. But Indian refiners will find it easier to import – having previously been unable, without insurance, to take delivery of the small amount of Iranian oil that sanctions allowed them to buy.