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Iran has drastically cut its gasoline imports in recent weeks as it started the second phase of an oil refinery, moving closer to reaching gasoline independence, Reuters reported on Wednesday, citing trading sources.
Iran—OPEC’s third-largest oil producer—has been reliant on gasoline imports for years because of lack of refining capacity and the Western sanctions that had limited the choices for funding and spare parts for refinery maintenance.
Now Iran has started the second phase of the Persian Gulf Star Refinery in Bandar Abbas, which will double the refining capacity of the facility to 240,000 bpd. According to trading sources who spoke to Reuters, production has yet to be ramped up and has yet to meet the highest gasoline quality standards.
“Iran does seem to have significantly reduced its reliance on imports,” Robert Campbell, head of oil products at consultancy Energy Aspects, told Reuters.
“All indications are that imports in March are lower. That coincides with the Iranian New Year, which is usually a strong demand period.”
The Iranian New Year holiday is the peak of the driving season, and gasoline demand jumped earlier this week, with Monday’s gasoline demand the highest on record, according to local media.
Still, Iran’s gasoline imports are expected to sharply drop in March—to around 70,000 tons or 20,000 bpd, from 300,000 tons in December and 120,000 tons in January and February, according to trading sources and shipping data compiled by Reuters.
Iran’s move toward gasoline independence comes as the Iranian nuclear deal looks increasingly shaky after U.S. President Donald Trump sacked Rex Tillerson as Secretary of State and is replacing him with CIA Director Mike Pompeo who is outspokenly hawkish regarding Iran. Analysts think that with the new appointment, the United States may take a harder stance toward Iran that could deepen the uncertainty over the nuclear deal and possible additional U.S. sanctions that could hurt Iran’s oil industry.
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.