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Iran's Oil Exports Halt Decline in May

Source: Reuters 5/22/2012, Location: Asia

Iranian oil exports have not dropped further in May after falling sharply since March, industry sources said on Tuesday, because core customers in Europe and Asia continue to buy ahead of European sanctions aimed at slowing Tehran's nuclear programme.

Crude exports from Iran appear to be holding steady at around 1.5 million barrels per day (bpd), according to a firm that tracks oil shipments. A source at a leading European oil company and another industry source also said shipments were little changed so far this month.

Last year, Iranian crude exports were running at about 2-2.2 million bpd with total production, including domestic consumption, at 3.5-3.6 million.

The lack of a significant drop in shipments in May contrasts with declines in March and April and indicates that while many countries have said they will buy less Iranian oil in response to tightening Western sanctions, they have yet to do so.

"Exports in May are looking steady," said one of the sources, who declined to be identified. "I think it has come down to the core customers who are continuing to buy."

Some customers of Iranian oil, including European oil companies Total SA and Hellenic Petroleum, have already stopped buying in advance of a European Union ban on Iran crude from July 1.

The EU in January embargoed purchases of Iranian crude but let those with existing contracts continue importing until July 1. The West suspects Iran is trying to develop atomic bombs, while Iran says its nuclear work is solely for civilian purposes.

The source with the European oil company also saw Iranian exports as largely steady so far in May and estimated that the amount of crude heading into storage on tankers in the Gulf was on the rise.

"That's what we are seeing, and they keep on building their floating storage," the source said.

The amount being held in floating storage, estimated at 33 million barrels in April, has risen to around 36 million barrels, according to an Iran-based shipping source.

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