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Iranian crude oil has landed an unlikely buyer in the South American country of Chile that occasionally buys Middle Eastern crude, shipping and trading sources told Platts on Thursday, two days after the U.S. withdrew from the Iran deal and said it was re-imposing sanctions on Iran, including on its energy sector and crude oil sales.
According to Platts’ sources, Chile’s state-held refiner ENAP has bought 140,000 metric tons of Iranian crude oil for May loading.
It’s a rare move for Chile, and this would be the first time in nearly 18 months that the country will have imported Iranian crude oil, according to data from S&P Global Platts trade flow software cFlow.
Iran is not the typical supplier of crude to Chile, and neither is the Middle East. Chile mostly imports oil from South American producers Brazil, Argentina, Ecuador, and Peru, although it occasionally buys oil from Middle Eastern producers such as Saudi Arabia, Iraq, and Kuwait.
While Chile is reportedly buying a rare Iranian oil cargo, the U.S. will be targeting Iran’s crude oil sales, and sanctions lifted under the deal will be re-imposed following a 180-day wind-down period, the U.S. Treasury said.
China, one of Iran’s key oil customers, assured Tehran that it would honor the nuclear deal from which the U.S. pulled out, and would continue to buy Iranian oil.
Related: Oil Markets Tremble On Iran, Israel Flare-Up
European buyers, however, are threading the needle carefully and are still assessing the potential impact of the U.S. sanctions on Iranian oil. Europe buys around one-third of Iran’s crude oil exports—700,000 bpd. Buyers are wary that the re-imposed U.S. sanctions, expected to kick in in early November, could affect their business and transactions with U.S. banks and in U.S. dollars.
Currently, demand for Iranian oil for June is robust, traders told Platts.
“I think Europe will keep buying Iranian barrels till the banking system will stop them,” a source at a trading house active in the European crude market told Platts. Iran’s oil continues to be very economical compared with other sour crudes in the region, the source added.
Yet, European interest in Saudi and Iraqi medium sour crudes has recently increased, also because they have started to cut their selling prices to lure more customers.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.