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Wednesday, 09 March 2016 12:51

European hopes of cheap Iran oil dashed

European hopes of cheap Iran oil dashed
European hopes of securing cheap deals for imports of crude oil from Iran are apparently dashed, with some big buyers complaining that the country was refusing to budge on its terms.

Those companies had been salivating for long at the prospects of Iran opening its oil floodgates to the market when sanctions were lifted on the country.

With that date having come and gone by about two months now, European major buyers say Tehran is unwilling to loosen its terms.

Ahead of the lifting of sanctions, Western media had generated high expectations of an Iranian urge to get rid of its crude, citing the country’s oil held in floating storage as well as existing oil glut in the market.

Meanwhile, Iran’s assertions that it wanted to ramp up production by 1 million barrels per day to redeem its lost market share raised those expectations.

Some analysts say Iran may be waiting until oil prices, which are hovering at $40 per barrel near lows, pick up further before taking steps to regain market share.

"You could think the Iranians have no incentive to increase their production while the prices are low. They lived like it for years already - they can cope with another few months," Reuters quoted one trading source as saying on Wednesday.

Another source said Iran would not consider offering discounts to win back market share as it would mean an escalation of a price war and would not benefit Iran or its customers.


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