The recent nuclear deal could cause the sale of crude to rise considerably in the country.
Now that a nuclear deal has been reached, it is believed that the Iran oil insurance sanctions may soon be eased, assuming that the country will indeed uphold its end of the agreement.
This will mean that big buyers of crude, such as India and China, will be able to boost their imports.
One of the elements of the agreement that was reached on Sunday between Tehran and six world powers was that the Iran oil insurance bans from the European Union would be eased in exchange for a curbing of the Iranian nuclear program. Though the bans will not be completely lifted, there will be some limited relief from those sanctions.
The Iran oil insurance bans from the European Union successfully placed massive pressure on the Middle Eastern nation.
Furthermore, in order to be able to avoid the threat of U.S. sanctions, crude purchasers in Asia, South Africa, and Turkey have all reduced the imports that they have been making from Tehran. Furthermore, even among the imports that continue to be made of Iranian crude, there has been considerable difficulty finding coverage and reinsurance, as the E.U. bans extended to all insurers based in the union. As the majority of coverage for the shipping was from the United Kingdom, it meant that this protection was essentially cut off.
From the time that the sanctions were put into place, it is estimated that the sale of Iranian crude has fallen by over half when compared to the figures from 2011. They have reached the level of about 1 million barrels per day as a direct result of the sanctions from the E.U. and the U.S. The bans also extended to the areas of banking, to add more pressure.
By lifting the Iran oil insurance ban, Goldman Sachs has stated that it “could free up some of Iran’s strained tanker fleet for increasing use in domestic floating crude oil storage.” In India, refiners slashed purchases as they were not able to obtain and maintain coverage when their protection from European reinsurers was withdrawn.