Iranian oil output will likely fall further from its lowest in three decades as the West tightens sanctions on the Islamic Republic, depriving Tehran of hard currency revenues, the International Energy Agency (IEA) said. The IEA, the West’s energy agency, said in its monthly report that preliminary data suggested Iran’s exports could have fallen below 1 million barrels per day (mbpd) in January due to lower Chinese and South Korean purchases after a rebound in December to 1.56 mbpd. January production was hovering below three-decade lows at 2.65 mbpd, a decline of 50,000 from December, the IEA said.
The US this month introduced new sanctions on Iran  as part of a dispute over Tehran’s nuclear programme. The new sanctions effectively bar Iran from repatriating earnings from its oil exports , requiring customers to pay funds into an escrow account at a bank in the purchasing country and limiting Iran’s use of the proceeds to buying goods in the countries where it exports its oil . “For Iran, the latest expansion of sanctions is expected to further undermine government finances as its oil export earnings are now effectively locked in the buyers’ countries,” the IEA said.
It estimates that Iran lost over $40 billion in export revenues  in 2012 or about $3.4 billion per month. Iranian exports surprisingly hit a six-month high in December but the IEA said preliminary data for January suggested they could have fallen back to below 1 million as Chinese imports amounted to just over 200,000 bpd. South Korea also appears to have reduced imports from Iran in January to 130,000 bpd from 185,000 bpd in December, the IEA said.
It said, however, the low January estimate remained subject to revisions. Iran and Western nations are due to hold a new round of talks over Tehran’s disputed nuclear programme. “Expectations, however, are low for a breakthrough in the more than decade?long dispute. Indeed, it is unlikely that progress will be made before Iran’s June presidential elections,” the IEA said.
The IEA was the last of three major energy reports to release estimates this week after Opec and the US government increased their forecasts for world oil demand growth this year . Opec said demand will expand by 840,000 bpd this year, 80,000 bpd more than previously expected, while the US Energy Information Administration raised its 2013 world oil demand growth forecast by 110,000 bpd to 1.05 mbpd. © Copyright 2012 www.tradearabia.com