LONDON: Iran has been racing to step up exports of petrochemicals and tap new markets to compensate for sliding oil sales, Iranian and international industry sources said, but now risks losing that crucial revenue as Washington tightens the screw on sanctions.
Tehran has been selling increased volumes of petrochemical products at below market rates, in countries including Brazil, China and India, since the United States reimposed sanctions on Iranian oil exports in November, according to the six sources who include two senior Iranian government officials, report agencies.Available ship-tracking data also points to a rise in monthly shipments since then.
The scramble to bolster petrochemical sales could be an indication of how successful the U.S. administration of Donald Trump has been in choking off Iran's oil revenues, which have fallen further than under previous sanctions in 2012.
While the November sanctions applied to petrochemicals as well, the four industry sources said there was a degree of ambiguity given the multiple types of products - including urea, ammonia and methanol - which allowed Iran to keep selling.
However on Friday the U.S. Treasury moved to tighten the restrictions by prohibiting companies from doing any business with Iran's largest petrochemical group, Persian Gulf Petrochemical Industries Company, citing its ties to Iran's elite Revolutionary Guards. The measures also apply to 39 subsidiary companies and foreign-based sales agents.
The Treasury said it intended to "vigorously enforce" the new petrochemical sanctions, which could deal another hammer blow to the Iranian economy.
It is difficult to put a comprehensive figure on Iran's income from petrochemicals, Iran's second-largest export industry after oil and gas, but officials said in February that non-oil revenues had surpassed the amount earned by oil exports.This week Iranian media quoted Ahmad Sarami, a member of the Iranian Oil, Gas and Petrochemical Products Exporters' Union, as saying Tehran received US$11 billion from petrochemical exports in the year ending in March.
The petrochemicals push comes as Iran's oil exports fell to around 400,000 barrels per day (bpd) in May, less than half of April's level and down from at least 2.5 million bpd in April last year, according to tanker data and industry sources.