IMF Says U.S. Sanctions Have Pushed Iran's Economy Into Recession

Lloyd Doyle
October 10, 2018

The Indian Oil Corporation and Mangalore Refinery and Petrochemicals have ordered a total 1.25 million tonnes of crude.

Drillers cut two oil rigs in the week to October 5, bringing the total count down to 861, energy services firm Baker Hughes said in its weekly report on Friday.

"The US government's tough stance raised the stakes for a more significant Iran export loss than previously foreseen", said Norbert Ruecker, head of macro and commodity research at Swiss bank Julius Baer. China is reportedly reducing its oil imports from Iran, though it's not likely to fully comply with the USA demands.

Trump administration officials have said their goal is to slash Iranian oil exports to "zero".

At the same time, Iran's Oil Minister Bijan Zanganeh on Monday called a Saudi claim that the kingdom could replace Iran's crude exports "nonsense".

Speaking at the "The Energy Forum" in New Delhi on Monday, he said the world's third-largest oil importer did not know whether it would receive a waiver from US sanctions.

The Islamic Republic exported 1.1 million barrels per day (bpd) of crude in that seven-day period, Refinitiv Eikon data showed.

India, the world's third-largest oil importer, is a major importer of Iranian oil.

India, however, wants to keep importing oil from Iran, because Tehran offers discounts and incentives for them at a time when the Indian government is struggling with higher oil prices and a weakening local currency.

United States sanctions against Iran will kick in from 4 November, which will block payment routes.

"Instead they're talking about 'sufficient pressure, ' which is their language for allowing banks to keep Iran connected to the global financial system, including through SWIFT or with oil waivers", the source said, referring to new efforts by officials in the Treasury Department and European allies to keep Iran connected to the premier worldwide banking system. "We do not know if we will get waiver (from United States sanctions) or not". The paper quoted a European diplomat as saying that the disagreement over SWIFT was heading for "a diplomatic train wreck".

In its World Economic Outlook released late on October 8, the International Monetary Fund said Iran's oil-driven economy is expected to shrink by 1.5 percent this year as a result of declining oil exports, with the drop in economic output accelerating to 3.6 percent in 2019.

That is an 11 percent decline from August, but data from global oil shipments and storage service provider puts the export volume north of 2 million bpd. Iran has pledged to block any OPEC supply increase that the country deems to be against its interest.

Oil also dropped as investors focused on rising output from other producers, such as top exporter Saudi Arabia, to compensate for lower Iranian supplies.

"Notwithstanding all the pressures that the Americans are creating on the oil issue, Iran has its own oil customers, and the work is going on in a way that no problems will arise", he told a parliament session in Tehran.

Other reports by Iphone Fresh

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