Iran decides to move its main oil export out of the Gulf

/ Oil & Gas / Tuesday, 11 September 2018 10:04

Iran has announced that it will move its main oil export terminal from the Gulf to the Oman Sea following a televised address by the Iran President Hassan Rouhani.

The decision will allow Iran to spare its tankers from using the strategic Strait of Hormuz. The President confirmed that exports were already being shifted from the Kharg Island terminal, which is located deep in the Gulf, to Bandar-e-Jask in the Oman Sea, and would be completed by the end of presidency term which ends in 2021.

In his address to the Iranian public, President Rouhani said, “This is very important for me. It is a very strategic issue for me. A major part of our oil sales must move from Kharg to Jask.” The President also formally announced the inauguration of three new petrochemical plants in the southern energy hub of Asaluyeh.

As it currently stands in order to reach the oil terminal on Kharg Island, tankers must pass through the narrow Strait of Hormuz which significantly slows down deliveries.

In the past Iran has repeatedly attempted to block the Strait of Hormuz, which is used by its Gulf rivals including its bitter rivals Saudi Arabia. Iran has attempted to block the passage when it has faced sanctions on its oil exports and possible military action by the United States.

The latest cryptic threat from President Rouhani came in July, when he reiterated that Iran has always guaranteed the security of the strait, but warned the US not to ‘play with the lion’s tail”.

By relocating its terminal to the Oman Sea would in theory enable Iran to continue exporting oil even if the strait was closed. The US took the decision to pull out of the 2015 nuclear deal in May - and will re-impose sanctions on Iran's oil sector in November.

The last time there was a major disruption in the flow of oil through Hormuz was in 1984 during the Iran-Iraq war when both sides attacked each other's oil facilities and tankers. The strait is regarded and recognized as the world's most important oil chokepoint - with roughly 35% of all seaborne oil passing through it, according to statistics released by the US Energy Information Administration.

In addition to this, Bloomberg has reported that Iran exported 2.1 million barrels per day (bpd) of oil in August, but analysts say US sanctions could reduce sales to around 1 million bpd. US President Donald Trump has been fiercely criticized by many congressmen in the US House of Representatives for pulling out of the nuclear agreement with Iran.

Please publish modules in offcanvas position.