Iran Oil Exports Expected to Climb Nearly 60 Percent as Analysts Say the Sanctions May Have Made The Country Stronger

Oil exports from Iran are expected to climb nearly 60 percent in May from a year ago.

Oil exports from Iran, which earlier this month indicated it might reverse previous policy and participate in curbing global production, are expected to climb nearly 60 percent in May from a year ago.

According to a Reuters source cognizant of the country's crude lifting plans, May shipments are set to jump to 2.1 million barrels per day (bpd) compared to 1.3 million bpd during the same month last year.

April loadings were the highest since January 2012, with 1.7 million bpd going to Asia (840,000 bpd to China); Asian loadings will be 1.6 million bpd this month, with 620,000 bpd going to China.

Reuters notes that the loadings volumes suggest that the Islamic Republic has overcome a tanker shortage, which posed a significant threat to its attempt to regain market share following the lifting of international sanctions in January.

Ian Bremmer, president of Eurasia Group, says Saudi Arabia will boost production in coming months to combat the Iranian surge, but he doubts that the increase will be as high as 1 million bpd, which has previously been reported.

While Iran's rapid return to the international market has surprised some observers, at least one analyst believes that the sanctions forced the country to diversify economically, which in turn has made it far more able to cope with the commodities slump than other Middle Eastern nations.

Aasim Husain, deputy director of Middle East and Central Asia at the International Monetary Fund, said at a London conference, "Many of Iran's neighbors are even more dependent on oil … it is much more diversified than others in the region."

However, Husain added that although higher oil output will boost Iran's economy for the next 12-15 months, it needs better infrastructure and finance in order to increase production substantially: "Iran needs to reconnect with the international financial world."

Amir Mehran, head of foreign assets and investment management at Iran's Bank Pasargad, admits, "We aren't there yet — we don't have the corresponding banking relationships that we want.

"The large international banks are not accepting Iranian business — with some exceptions."

Earlier this month, Iran stated that it has no plans to increase exports from 2.2 million bpd  and may in fact even participate in a renewed effort to freeze global production.