Iran is preparing for its return to international oil markets, according to Bloomberg, which reported that officials from the National Iranian Oil Co. had met with two South Korean refiners to discuss supply deals.
Before Washington imposed sanctions on Iran for its nuclear energy program during President Trump’s term, South Korea was one of the top three importers of Iranian oil along with China and India. It imported an average of 18.5 million barrels a month from Iran.
The sanctions, however, discouraged the country from continuing its oil business with Iran and the government in Seoul even froze some Iranian oil money when the sanctions snapped back in 2018.
China, on the other hand, never stopped buying Iranian crude oil. According to the latest data, it was the destination for almost all of the country’s export oil, which in December hit a high of over 1 million bpd.
The visit of the Iranian oil officials might signal that negotiations in Vienna are going well despite reports that it would be challenging for the U.S. and the Iranian side to reach an agreement on Tehran’s nuclear program.
If a deal is reached, Iran could add half a million barrels daily to global supply between April and May, and another 800,000 bpd by the end of the year, according to Citi.
“If a deal is struck, Iran could ramp up “crude and condensate production within four to six months, or even quicker as Iran is thought to have robust oil-on-water storage,” said Rystad Energy analyst Louise Dickson as quoted by Reuters last week.
She also noted that Washington should be very interested in reaching a deal given the uncomfortably high oil prices that have pushed gasoline prices higher, too, at a time when the federal government is trying to tame runaway inflation.