The October insurance news out of Iran has shown that even though the American and European Union sanctions are still in place against covering oil exports from Iran, their exports still increased by about 70,000 barrels per day, reaching 2.7 million bpd that month.
This shows that the Western bans are not having the intended impact on the country.
Over the two previous months, the Iranian crude exports spiked to 1.3 million bpd from having been resting at 1 million bpd before that. This illustrated the difference it made when South Korea and China increased their purchases from that country. The monthly energy report from the International Energy Agency (IEA) stated that “China and South Korea appear to account for the lion’s share of the increase in Iranian imports.”
It means that Iran likely brought in about $900 million more in October.
That calculation is based on an oil price of $100 per barrel. Last month was the first time that South Korean oil companies restarted their imports of Iranian oil after having held back due to the European insurance companies that stopped coverage on the tankers carrying the crude. The very first cargo of this nature in two months arrived in South Korea in October.
South Korea chose to resume its oil imports from Iran following Tehran’s plan that included an offer of up to $1 billion in coverage for its tankers of crude. This decision was made by Iranian insurers when the European Union banned all of its own insurers – such as Lloyds – from being able to provide that coverage. As approximately 90 percent of Iranian tankers were covered by companies in the E.U., this effectively cut off its protection until it was able to offer it on its own.
This action from Seoul has arrived despite urges from the United States not to resume the purchase of oil from that Middle Eastern nation. The impact only grew when Iran’s largest crude buyer, China, arranged to boost its imports.