After the implementation of the nuclear deal in January 2016, Iranian production and exports recovered to pre-sanctions levels inside six months. Exports reached a peak of 2.8 million barrels per day in April 2018, including 300,000 barrels per day of condensate. Buyers have come from numerous countries, with the bulk sold into Asia, the Mediterranean and Northwest Europe.
Since the U.S. withdrew from the nuclear deal in May 2018, Iranian crude and condensate exports fell to around 1.8 million in September on our estimates. South Korea, a big customer, has cut all imports since August. European buyers are winding down – France stopped in July, Italy, Spain and Greece follow this month. Beyond November 5, we expect crude exports to fall to 1 million barrels per day, though it could vary month to month; and condensate to 100,000 barrels per day. Crude sales will be concentrated around a core of supportive state buyers, China, India and Turkey.
It will be difficult for Iran to maximize exports when virtually all trade in oil is cleared in U.S. dollars, putting international oil companies, many national oil companies, traders and banks off limits. Crude exports contribute one-third of government revenues so there’s a huge incentive for Iran to use every conceivable lever.