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Iran has shut down some oil fields in its southwest Khuzestan province bordering Iraq and the Persian Gulf, as the Islamic Republic is looking to control the damage from recent flash floods that have cost it billions of U.S. dollars.
Iran shut down last week oil fields in Khuzestan as it tries to control the damage and prevent an environmental disaster, the National Iranian Oil Co (NIOC) said in a press release, citing Oil Minister Bijan Zangeneh.
Iran has had some pipelines in the province emptied for the first time, while oil production has been reduced in some flood-hit areas as a precaution, Zangeneh said, stressing that crude production in the Khuzestan province had not been completely stopped.
“Currently all oil wells in the West Karoun region are flooded or surrounded by water except for a protected area of hundreds of meters around the wells,” Zangeneh said.
The floods in recent weeks have killed more than 70 people, destroyed thousands of homes, and forced hundreds of thousands of people to seek emergency shelter. According to Iranian lawmakers cited by state media and Reuters, the floods caused the equivalent of US$2.5 billion in damages to road infrastructure and agricultural land.
The floods in Iran and the shutdown of some oil production as a precaution come at a time when Iran’s oil industry and exports are under U.S. sanctions that have been limiting the Islamic Republic’s exports to 1.1 million bpd-1.3 million bpd in recent months—around half of Iran’s crude oil exports at this time last year, before the U.S. announced its withdrawal from the Iran nuclear deal and re-imposed sanctions on Iranian oil in November.
The U.S. waivers for eight key Iranian oil customers, including China, India, Japan, and South Korea, expire in early May. While the U.S. Administration says that it continues to pursue zero Iranian oil exports, analysts expect Washington to extend waivers to at least a few of the currently exempted buyers, with reduced volumes allowed under the new waivers, as the Administration may be leery of pushing oil prices too high.
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.