Discounted Iranian oil

ACCORDING to state news agency IRNA, Iran is selling oil and gas at a discount to Asian customers as it braces for the return of US sanctions. Though no details of the discount were given and Tehran maintained it was as per usual practice by the industry but Bloomberg reported that National Iranian Oil Company was reducing official prices for September sales to Asia to their lowest level in 14 years.
The Iranian offer is meaningful and attractive for customers that are worried over continuous rise in prices of oil during the last few months but it is yet to be seen whether or not they are able to benefit from the offer. The United States will seek to block Iran’s international oil sales from November 5, when the second phase of sanctions are re-imposed as part of Washington’s withdrawal from the 2015 nuclear deal with Iran. Though key buyers like China and India have vowed they would not make significant cuts to their energy purchases from Iran but it is understood that Iranian sales might witness a drop after re-imposition of sanctions and the discount offer is apparently aimed at increasing sales and generating additional revenue. The situation would become complicated, as the United States has also threatened to penalise companies and entities dealing with Iran in areas that are covered by sanctions. Though the European Union and some other countries are still adamant that they would go ahead with business deals with Iran, which is faithfully implementing its part of the nuclear accord but pressure from the United States could affect trade with Iran in many ways as Washington has various leverages. Analysts, however, point out that in the long run sanctions did not serve any worthwhile purpose in the past and are unlikely to yield any positive result in future and the only way forward is dialogue.

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