Oil sanctions cause Iranian oil exports to plunge

President Obama is enjoying election bonus points amid the apparent success of his foreign policy involving Iranian sanctions. The US-led bans have brought on losses to Iran at a rate of more than $130 million daily, without adversely affecting current crude oil prices here at home.

Bloomberg reported that Iran would be posting losses of $48 billion on a yearly basis. The country’s oil exports dropped by more than half, about 1.2 million bpd, since the oil embargo took effect on July 1 of this year.

Based on estimates by Bloomberg analysts, Iran’s crude exports fell to 1.1 million bpd. It’s a sharp decline considering that it was exporting 2.3 million bpd just last year. Iran went down a notch lower (from second to third) among the world’s top crude exporters, surpassed by Iraq.

Aside from plunging oil sales, the country is also challenged by a rising unemployment rate along with a deteriorating local currency.

Iran had earlier warned that it will bar the transport of crude by blocking the Hormuz Strait through which about 20 percent of the world’s crude oil supplies pass. This caused March crude oil prices to soar to a 3-year record high but was later tempered by the convergence of a slack in world economies, boom in U.S. energy output, and Saudi efforts to increase output. With this, Obama is almost assured some stability in local fuel prices in the short-term – a precursor that could boost Obama’s likelihood of winning in the forthcoming 2012 elections.

Mike Wittner, head of Societe Generale SA’s oil market research team said that the bans were an outright success. Despite earlier fears of a backfire, the US and EU are said to be “having their cake and eating it too” because prices have remained at favorably low levels despite ongoing tensions.

Rising crude oil prices constitute one of the top concerns of American voters. However, per a recent Gallup poll, voter fears regarding gas prices dropped to 1 percent (July 9-12 polls) from a much higher 8 percent (April 9-12 polls). According to reports, voter concerns were somehow allayed by Mitt Romney’s demand to fire government heads that were responsible for gas price hikes.

Meanwhile, crude oil prices per barrel dipped owing to Saudi efforts to step up production. Based on data from the International Energy Agency (IEA), the kingdom is already producing crude at a very high rate of 10 million bpd or even more. This level is the country’s highest since 30 years ago, EIA disclosed.