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Refiners Eye Iran for More Medium, Heavy Crude

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With Russia invading Ukraine this week and the risk of sanctions hanging over Russian crude and financial transactions, the possible return of Iranian oil to global markets can’t come soon enough for refiners. A potential new nuclear agreement with the West would ease sanctions on Iran's oil sector and unleash Iranian exports in a red-hot oil market where benchmark oil prices have spiked above $100 per barrel. Estimates for Iranian crude export levels vary widely, with one market source who tracks them putting the figure at around 1.2 million barrels per day in January. Energy Intelligence's Research & Advisory unit puts January crude exports at a lower estimated 790,000 b/d. An Iranian oil official earlier in February said Iranian production could jump by as much as 1 million b/d within six months from current levels of roughly 2.5 million b/d if sanctions are lifted — which would take exports to around 1.7 million b/d. The National Iranian Oil Co. (NIOC) has been laying the groundwork for a potential return of exports, talking to many Asian refiners across the region. NIOC has been using the talks to gauge how much demand there is for Iranian crude and to explore the possibility of supplying “cheap crude” to Asian refiners, said a source at an Asian refiner that used to buy Iranian term crude. NIOC also appears to have approached some trading houses about the possibility of helping to market Iranian crude, which would be a significant departure from its usual practice of selling crude through term contracts.

Topics:
Crude Oil, Oil Demand, Oil Supply, Refining, Oil Products, Sanctions
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