Normalcy Expected in Iran-Spain Oil Ties

EghtesadOnline: The lifting of sanctions in January has created the conditions to sell more oil to Spain, gradually replacing Madrid's once major supplier Venezuela which is grappling with a serious economic crisis.

News ID: ۷۶۹۴۴۴

15 September 2016

According to a report published in the Spanish daily El Mundo on Monday, Iran exported 1.1 million barrels of crude oil to Spain in the first seven months of the year.

Meanwhile, Spain's intake of Venezuelan oil fell to 697,000 barrels in January-July, down 63% compared to the same period in the previous year.

Iran was a key oil exporter to Spain before the tightening of international restrictions over its nuclear program.

Spain bought nearly 3 million tons of oil from Iran in the first five months of 2011, or 14% of its total needs. But it cut imports to just 692,000 tons in the first five months of 2012 in fear of violating a new wave of European Union trade restrictions against Tehran that took effect on July 1, 2012.

To make up for the drop in imports of Iranian crude, Spain more than doubled its imports from Latin America and also turned to smaller producers such as Libya and Nigeria in an effort to diversify its crude supplies.

Tehran Adamant

Iran has ramped up oil output by 1 million barrels per day since the removal of sanctions in a quest to regain the ground it lost under the  punitive restrictions that ostensibly targeted its nuclear program but undermined its economic and industrial base and harmed its oil trade with the world.

The country is now adamant to pump at the pre-sanctions level of around 4 million barrels a day in the short-term and boost production to 5.7 million bpd within five years, including 1 million barrels of gas condensates.

The Oil Ministry said last month its oil output has reached 3.85 million barrels per day. A report published by the Organization of Petroleum Exporting Countries on Monday cited secondary sources as saying that Iran is pumping slightly above 3.6 million bpd.

Iran's emergence in the crude market comes as Venezuela is struggling to adapt to low oil prices that fell to their lowest levels in more than a decade in the beginning of 2016, according to Financial Tribune.

Venezuela was the world's 10th biggest oil producer until a decade ago, but its output tumbled to a 13-year low in June. It pumped more than 3 million bpd in 2011, and is now producing 2.1 million barrels per day, according to OPEC data.

Analysts say that Venezuela's oil output could further drop by 400,000 bpd by the end of the year as major oil companies and contractors who have not been paid for months plan to pull out of the oil nation's debt-laden economy.