LONDON: Iran's oil exports have dropped in March to their lowest daily level this year, according to tanker data and industry sources, even before Washington formally requires importing countries to reduce purchases to avoid infringing U.S. sanctions.
Shipments are averaging between 1.0 and 1.1 million barrels per day (bpd) so far this month, according to Refinitiv Eikon data and three other companies that track Iranian exports. That's lower than February, when shipments were at least 1.3 million bpd.
Shipments have dropped from at least 2.5 million bpd in April 2018, the month before U.S. President Donald Trump withdrew the United States from a 2015 nuclear deal with Iran and reimposed sanctions, fueling a year of economic crisis in the country.
Tehran has vowed to keep exporting oil despite U.S. efforts to reduce its shipments to zero, but the export decline could be another indicator of economic pressure from the embargo.
In a new year speech on Thursday, Iran's Supreme Leader Ayatollah Ali Khamenei said the Islamic Republic had resisted U.S. sanctions and called on the government to boost national production to face enemy pressures.
For the oil market, the drop in Iranian shipments will add to an OPEC-led oil supply cut and comes ahead of U.S. plans to clamp down further on Iranian exports from May, after ending of the current round of fairly generous waivers from sanctions.
Still, the Organization of the Petroleum Exporting Countries and its allies, which began cutting production from Jan. 1 to bolster prices, are unlikely to be in a rush to change course, analysts say, without concrete signs of a shortage.
"We do expect less Iranian oil exports after May," said Sara Vakhshouri of energy consultant SVB Energy International.
"However, we don't think that OPEC will increase its production in anticipation of lower Iranian oil exports, but only if there are clear signs of further Iran and/or Venezuelan export cuts in the market," Vakhshouri said.
Venezuela, an OPEC member, is also under U.S. sanctions which have curbed its exports.
Iran's export levels have become more opaque since U.S. sanctions on the country's oil sector took effect in November, although estimates of March supplies are falling into a narrower range than in previous months.
Kpler, a company that tracks oil flows, said Iranian shipments so far in March had dropped sharply to 1.03 million bps from 1.44 million bpd in February.
"Iranian crude loadings have struggled through the first half of March," Kpler said in a report, although it said exports would rise closer to 1.3 million bpd in the rest of March.