“Less profitable for Iran to sell oil via private sector”

Posted on August 5, 2012

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It would be less profitable for Iran to sell oil via the private sector, Senior fellow at Nanyang Technological University’s S. Rajaratnam School of International Studies, James M. Dorsey believes.

“Iran has to sell its oil at a discount, and is only able to sell lower volumes,” Dorsey noted.

Yesterday it was revealed that 250 local private sector companies in Iran will be exporting Islamic Republic’s oil abroad.

Head of Iranian Oil Exporters Union Hassan Khosrojerdi said Iran has established three consortiums with participation of domestic private companies to evade the Western countries’ sanctions over Iran’s oil export.

Khosrojerdi said the first consortium includes 65 private sector companies that will be selling Iran’s crude abroad. Khosrojerdi said that two more consortiums will be created, also consisting of Iran’s private exporters.

Speaking of the time when private companies of Iran will begin selling crude, Khosrojerdi said that it is estimated that the sales will begin in the second half of the year (begins on 21 March).

There is an agreement in existence between Iranian oil ministry and the Iranian Oil Exporters Union that if the oil ministry sells oil to one source, the private sector does not interfere, and continues its business with other clients.

The European Union’s oil embargo on Iran came into force on July 1 and a new U.S. law penalizing countries that do business with the Central Bank of Iran by denying their banks’ access to the U.S. market came into force on June 28.

Dorsey believes the number of private sector companies that are involved in selling Iran’s oil abroad does not make much difference.

“The number of companies Iran uses as sales outlets is not that important, because it can only do so in countries willing to violate UN, US or EU sanctions,” Dorsey explained.

Iran exported 2,537 bpd of crude oil in 2011. In 2010 the country exported 2,583 bpd of crude, and 2,406 bpd in 2009, according to OPEC.

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