US ‘unlikely to win battle against Iran’s oil exports with China, Syria, Turkey still buying’

Washington is not likely to succeed with its campaign to drive Iranian oil exports to zero and Iran is expected to maintain its shipped crude consignments at 400,000 b/d in the second half of 2019 and 2020, according to a Fitch Solutions Macro Research research note cited by Rigzone on September 10.

“Despite all [Iran oil] exports now being sanctionable, volumes have continued to flow out of Iran to buyers in markets including China, Syria and Turkey,” the note said.

“Exports have become increasingly difficult to track, with tankers routinely turning off their transponders and performing complex chains of ship-to-ship transfers,” the note added.

China has thrown Iran a “vital lifeline” and taken the lion's share of exports in the period since sanctions waivers expired in May, according to the note.

“This is not unexpected, given that Beijing and its state-backed enterprises have the greatest capacity to circumvent US sanctions,” it stated.

Some analysts have considered whether China might use its oil trade relationship with Iran as a bargaining chip in its trade war with the US. There is the possibility that Beijing might agree to curtail imports of Iranian oil as part of a trade deal with Washington, but with the prospects of that having deteriorated in recent weeks, there may also be a higher chance that China has become more open to consignments of crude from the Islamic Republic.

“Based on Bloomberg's tanker tracking data, around 55 percent of [Iranian oil] exports since May have been taken up by Chinese buyers and we expect this dynamic to remain in play over the coming quarters,” the cited note added.

The US has set out to cripple Iran’s economy to force Tehran to make concessions on its nuclear and ballistic missile programmes and its support provided to militias across the Middle East that are variously enemies of Israel and Arab allies of Washington.