Saudi dominance hampers Iran sales

Dubai. – Iran’s efforts to ramp up oil exports to Asia may stall because rival supplier Saudi Arabia cornered that market during years of sanctions on the Islamic Republic, according to Moody’s Investors Service.

“Iran will try to increase exports to China but regional rivalries could hinder this effort, with Saudi Arabia currently China’s largest crude supplier,” Waheed Shaikh, an associate analyst at Moody’s, said yesterday in a statement.

“China will likely maintain its crude import policies rather than risk damaging ties with either country.”

Iran, the second-biggest producer in the Organisation of Petroleum Exporting Countries (Opec) until sanctions were intensified in 2012, is trying to raise output and exports by 1 million barrels a day this year after the trade curbs were lifted last month.

Asia, where Iran was permitted to sell oil during the restrictions, will remain its main target and an area of competition with Saudi Arabia.

Iran may add more than 500 000 barrels of oil a day this year to already oversupplied global markets, putting more pressure on prices, Moody’s said in a report.

The country has already loaded its first post-sanctions cargo to Europe as it seeks to win back customers there.

Benchmark Brent crude has fallen about 40 percent in the past year as Saudi Arabia and other members of Opec maintain output to squeeze out higher-cost producers around the world.

The price slump is hampering Iranian plans to upgrade ageing oil fields by making it harder to attract foreign investment, Moody’s said.

International oil companies, having slashed spending amid oil’s collapse, also face political risks in Iran, according to the ratings service.

These include the possibility of non- compliance with last year’s nuclear agreement with world powers, as well as the outcome of elections this month, Moody’s said.

US companies are still prohibited from investing in the country. – Reuters

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