An Unsanctioned Iran?

United States and European Union-led sanctions against Iran have significantly reduced Iranian crude oil exports since they were first introduced in 2010 and then substantially tightened in 2012. In 2005, Iranian production amounted to nearly 4 million bbls/day, today production stands at around 2.6 million bbls/day shown in the chart below. During the past two months, exports have reportedly dropped to 715,000 bbls/day down from 1.17 million bbls/day in September. In apparent attempts to rejuvenate trade opportunities Iranian leaders made recent overtures to the international community suggesting they would moderate their nuclear enrichment programs. The election of the politically moderate Hassan Rouhani could be seen as the first step of a change in course. This is a sharp contrast from the rhetoric seen in 2012 when the country repeatedly threatened to close the Strait of Hormuz, a key shipping lane for Arabian Gulf exports. While the prospect of increased crude exports from the Arabian Gulf would seem like a net positive for VLCC demand, the impacts on the market are not that straight forward. Download here