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EghtesadOnline: Some 50% of Iran’s "non-oil" exports actually consist of petroleum-based products and petrochemicals that either directly or indirectly come from the oil industry.

Latest statistics provided by the Islamic Republic of Iran Customs Administration shows overall "non-oil" exports hit 105.9 million tons worth $40.07 billion during the 11 months to Feb. 19 to register a 6.36% decrease in weight and a 0.74% decline in value year-on-year, IRNA reported. 

Countries plan their trade based on their economic advantages. Therefore, foreign trade mirrors economy. They seek to export items they are capable of producing at the lowest end-price in order to compete with other countries, Financial Tribune reported.

Except for China, which exports almost everything thanks to its cheap labor force and production, each country is known for the product it exports, IRNA wrote.

 

 

Still an Oil-Dependent Economy

Oil is still Iran’s so-called “export identity card”, despite efforts made over the past years to wean the country’s economy off petrodollars and shift it toward non-oil exports. 

With its relatively higher added value–non-oil exports, in the true sense of the word–are of greater importance.

However, it is a matter of debate how the Islamic Republic of Iran Customs Administration has classified non-oil exports. 

By “non-oil”, IRICA actually refers to all commodities, except crude oil. 

In fact, gas condensates were Iran’s main exported non-oil commodity during the 11 months under review with $3.93 billion, followed by liquefied natural gas worth $1.92 billion, liquefied propane worth $1.6 billion, light oils and products, except gasoline, worth $1.32 billion and methanol worth $1.29 billion.

Today, gas condensates undergo the least change before being exported. Even liquefied natural gas and petrochemicals, the backbone of Iran's exports, have been classified as "non-oil". 

IRICA’s latest foreign trade report shows that of the $40 billion in "non-oil" exports,  more than 32% were petrochemical exports and about 20% were gas condensates and other related products.

Gas condensate exports alone have a share of 9.8% in total exports. The shares of liquefied natural gas, liquefied propane, other light oils, except gasoline, and methanol are at 4.8%, 4%, 3.3% and 3.2% respectively. 

 

 

Targeting Weak Spot

Despite US sanctions against Iran’s petroleum industry, petrochemical exports saw a year-on-year rise of 14% during the 11-month period. 

However, exports of gas condensates declined by 52% in terms of weight and 37.5% vis-à-vis value YOY. 

The US moved in May to unilaterally withdraw from the nuclear deal Iran signed with world powers back in 2015. The deal known as Joint Comprehensive Plan of Action saw years of international sanctions against the Islamic Republic removed as of 2016. In exchange, Tehran agreed to limit the scope of its nuclear program. 

The withdrawal was followed by the imposition of "toughest ever" sanctions against Iran as described by Washington.

The renewed sanctions, once again, laid bare the deficiencies of the Iranian economy, mainly the fact that it has relied heavily on oil as a source of revenue for too long. Not surprisingly, the sanctions took aim at Iran's sales of crude by scaring off buyers. This means dwindling income to fund the economic affairs of the country from importing commodities to managing the operating budget of the government.

The US has already granted a group of eight countries waivers from sanctions on buying oil from Iran. Although Washington will likely extend the waivers, it will demand that they reduce their intake of the commodity, sources with knowledge of the matter told Reuters.

The figure Washington is aiming at is below 1 million bpd, which means a cut by some 250,000 bpd, according to Oilprice.com. 

Iran’s biggest oil clients are India and China.

“The goal right now is to reduce Iranian oil exports to under 1 million barrels per day,” one of the sources said, adding that Washington was worried about the risk of oil prices spiking if the zero-export scenario was pushed too quickly.

In fact, one of the sources said, the scenario might never play out because crude oil prices—Brent crude in particular—are already at “the high end of Trump’s crude price comfort zone”.

They also seem to be at the high end of India’s oil minister’s comfort zone. Last week, during a meeting with his Saudi counterpart, Dharmendra Pradhan called on the kingdom to make sure the market was well supplied so prices would not go too high amid OPEC production cuts.

India is currently negotiating with the US an extension of the sanction waivers. It is perhaps the most vulnerable Iranian oil importer when it comes to price shocks since the country imports more than 80%of the crude it consumes.

Meanwhile, undeterred by US plans, Iran is looking into replacing aging tankers from its fleet with newer, secondhand vessels, as it plans to keep its crude flowing into international markets.

 

 

IRICA's Latest Export Details

China, Iraq, the UAE, Afghanistan and Turkey were Iran’s top five export markets during the 11 months under review. 

Iran’s exports to China reached 28.52 million tons, indicating a decrease of 9.41% in weight compared with the year before.

Iraq bought 18.39 million tons of non-oil goods from Iran, up 53.09% in tonnage and 42.02% in value YOY.  

Exports to the UAE, Afghanistan and Turkey declined by 21.29%, 2.15% and 7.63% respectively.   

The average price of each ton of exported commodities hovered around $378, up more than 5.8% YOY.

In contrast, the average price of each ton of imported commodities hovered around $1,331, down 4.93% compared with last year’s same period.

The Statistical Center of Iran’s latest report shows the export price index (using the fiscal ending March 2012 as base year and in terms of rial) stood at 313.3 for the third quarter of the current Iranian year (Sept. 23-Dec. 21, 2018), to register a 30.3% increase compared with the preceding quarter (summer) and a 71.7% rise compared with the same quarter of the year before.

The average EPI during the four quarters to Dec. 21 witnessed a 37.4% growth YOY.

Furthermore, the third quarter saw EPI stand at 139.1 in dollar terms, registering a 10.4% increase compared with the preceding quarter and a rise of 26.3% compared with the same quarter of last year. 

The average EPI in dollar terms during the four quarters leading to Dec. 21 witnessed a 15% growth year-on-year. 

 

Petroleum Iran exports petrochemicals oil industry Non-Oil Petroleum-Based