Pandemic Dislodges Oil, Gas and Petrochemical Exports

EghtesadOnline: The value of oil, gas and petrochemical exports has declined due to upheavals in the international oil market caused by the coronavirus. The massive quarantines and market closures worldwide have had a negative impact on the sales of the strategic products, a spokesman of the Iranian Oil, Gas and Petrochemical Products Exporters' Union said.

News ID: ۷۵۰۰۶۷

18 May 2020

“According to recent data from the Iran Customs Administration, total exports in the first month of the new calendar year (March 20-April 19) was $3.58 billion, which was down 36% compared to the same period last year,” Hamid Hosseini was quoted as saying by ISNA.

As many countries imposed mass quarantines and businesses were forced to down shutters to slow the virus spread in the past three months, consumption of petroleum and petrochemical products has fallen to levels unseen in modern history.

Though many countries are slowly but cautiously getting back to work, economic experts insist nothing in the world will return to the pre-Covid era, especially demand for oil and oil products.

Before the new disease hit Iran in late February, petrochemical exports were up 5% in the first ten months (March 2019-Feb 2020) of last year compared to the same period in the previous year.

Export of Iranian oil, gas and petrochemicals was suspended temporarily in March as part of preventive measures to combat the contagious disease. It resumed shortly after, albeit at lower prices and limited quantities.

Referring to the petroleum and petrochemical products accounting for one-third of Iran’s total exports, Hosseini said the largest share of exports was to China with more than $523 million.

The second destination for oil products was the UAE. Over $355 million worth of products were exported to the neighboring emirate.

Iraq was third in the import of petroleum products from Iran at $259 million.

“Afghanistan and Turkey were next. Iran exported $125 million and $72 million worth of oil, gas and petrochemical products to the two neighbors, respectively, in the first month of the new Persian year (began March 20).”

Exports included methanol, propane, butane, lightweight and heavy polyethylene, ammonia, sulfur and styrene among others.

South Korea, India, Japan, Hong Kong, Indonesia, Egypt and Kuwait were other export destinations.

Global Impact

The fast spreading coronavirus has decimated the international energy market along with big and small economies, mainly oil-based economies.

The most visible victim is China where economic activity has declined sharply and is forecast to remain low over the next few months. The downturn in China’s economy is hurting economies round the globe, albeit to varying degrees.

In the petrochemical industry context, it is being severely affected due to the increasing market uncertainties, price volatility and declining consumption in many of its key segments.

The pandemic and restrictions on movement that have followed continue to raise new challenges for the European petrochemical industry and the wider EMEA region (Europe, the Middle East and Africa).

Supply-chain disruptions are increasing and market players face the prospect of cutting prices regardless of margins. Talks of ease production closures are expected to negatively impact petrochemicals in the coming months.

The novel coronavirus, which was first reported in China in December, has caused an outbreak of respiratory illness in Iran and 212 other countries.

Iran has confirmed over 118,000 cases of infection with the new virus, with about 7,000 reported dead by Sunday afternoon.

The total number of people worldwide who have tested positive for the virus has exceeded 4.64 million with over 312,000 deaths.