SVB Energy International in the Media 2018
AlJazeera: Dec. 23, 2018 - While the US tries to use its currency as a weapon, "all of the eight countries that are importing oil from Iran - none of them are going to give any types of currency back to Iran," explains Sara Vakhshouri, founder and president of SVB Energy International. "Iran can only import humanitarian goods or necessary goods, those goods that are not subject to sanctions back to Iran, so they're kind of bartering for food and medicine." Additionally, the European Union is exploring "specific channels of trade with Iran banking and transactions with Iran, and if these channels are built for more formal or usable ways of working with Iran, this will of course weaken the dollar as a weapon", says Vakhshouri. "Also, Iranians are selling their oil in local currency to these eight countries, so if we push this more or if we want to use [the dollar] as a weapon, it'll lose its influence." But at the same time, "we cannot deny the fact that all of these things have their own consequences on Iran's economy".
European Council on Foreign Relations: December 17, 2018 - Last month, the Trump administration reimposed sanctions on Iran’s energy sector as part of its ‘maximum pressure’ campaign against Iran. But it nevertheless sought to prevent an unhelpful spike in oil prices ahead of the midterm elections. As a result the United States issued eight waivers to importers of Iranian oil: China, India, Japan, South Korea, Turkey, Taiwan, Italy, and Greece. The waivers allow these countries to import a limited amount of oil from Iran without falling foul of US sanctions. The ‘waiver effect’ was visible from the outset: oil prices dropped the day the waivers were announced. At the same time the market expected other oil producers – particularly Saudi Arabia and Russia – to cut back their temporary production, which had increased over the previous few months to cover Iran’s drop in production. Saudi Arabia and Russia agreed to this at the 7 December OPEC meeting.
Al-Monitor: December 4, 2018 - India, Japan and South Korea also received waivers from the Trump administration. Sara Vakhshouri, an expert on Iran’s oil industry and president of SVB Energy International, estimates that India will buy an average of nearly 300 million barrels a day — only a slight reduction from the pre-sanctions period — while Japan will import 130,000-150,000 barrels and South Korea 180,000 barrels. Taiwan was also granted a waiver but decided not to use it. Vakshouri told Al-Monitor that the island nation “was not a regular costumer and its imports are very insignificant.” Taiwan buys most of its oil from Saudi Arabia and Kuwait. Mikkal Herberg, research director for Asian Energy Security at the National Bureau of Asian Research, agreed with Vakhshouri that the small quantity of oil imported from Iran was easy for Taiwan to replace. Still, Iran’s exports will still be cut by at least a million barrels a day from pre-sanctions levels. Vakhshouri estimates that Iran’s exports will average 1.1 million-1.3 million barrels a day for the duration of sanctions. Iran’s budget for the next year beginning March 21 assumes exports of 1.5 million barrels a day.
Deutsche Welle: December 4, 2018 - Much depends on how the Russians decide to play their hand. Most overseers expect Saudi Arabia and the GCC to decide to cut production. "But without Russia, the market impact is likely to be limited," Sara Vakhshouri, president of SVB Energy International, told DW. "Russia is not very interested in losing market share and reducing its oil production, especially that the market is not convinced that the eight waivers will significantly add to Iran's exports," she went on.
S&P Global Platts: Dec. 3, 2018 - Sara Vakhshouri, a Washington-based analyst who heads the consultancy SVB International, said the exit of Qatar from OPEC is symptomatic of the weakening ties between members, as Saudi Arabia and non-OPEC Russia have taken the reins of output policymaking over the past two years. "Some of the members feel their interests are not fulfilled, and they are not gaining much by remaining in OPEC," Vakhshouri said. "This could evolve OPEC's function and realities from what we are used to."
Financial Tribune: December 2, 2018 - Despite waivers the US government granted to eight countries after imposing sanctions on Iran’s oil exports, the country’s crude sales will fluctuate between 1.1and 1.3 million barrels per day for the rest of the year, president of SVB Energy International in Washington, DC said. "Exports may witness a small increase of 100,000-200,000 bpd from January, mostly going to Japan and South Korea," Sara Vakhshouri, a former expert working for the National Iranian Oil Company said, Afkar News reported. The analyst who is often by news outlets such as Reuters, Bloomberg, BBC and Platts Energy TV, Iranian tankers are shipping crude to Asia and as such not much capacity is left for deliveries to the European Union states including Italy and Greece. Unlike other traders and analysts who assert the waivers could increase Iran’s oil exports, Vakhshouri is of the opinion that that would be improbable due to lack of Iranian shipping capacity. Tehran says its November oil sales were close to 1.1 million bpd, down from 1.7 million bpd in previous months. The eight countries that have been granted waivers are China, India, Japan, South Korea, Taiwan, Turkey, Greece, and Italy. “The only game changer would be the China-US tariff talks. Should China decide to increase its imports to the normal 550,000-650,000 bpd, Iran's oil sales could reach 1.4 million bpd,” she said. China and the US have imposed tariffs on billions of dollars' worth of goods. The US has hit $250 billion of Chinese goods with tariffs since July, and China has retaliated by imposing duties on $110 billion of US products. According to SVB survey, China's oil import from Iran peaked in the January-April period to 664,000 bpd and the world’s second largest economy is allowed to buy a maximum of 350,000 bpd from December till June 2019 when waivers are expected to be renewed. India will continue importing 280,000-300,000 bpd of Iranian oil, Vakhshouri said, adding that she expects Turkey too will continue buying up to a maximum of 150,000 bpd. Iranian condensate production will not be affected with most exports (about 180,000 bpd) going to South Korea, she said. Japan's share of Iran oil exports, which stood at 314,000 bpd in 2011, will decline to as low as 130,000 bpd. Italy whose export amounted to 250,000 bpd in 2016 will have to cut its purchases by half. Reportedly, Taiwan will not import Iranian crude due to banking restrictions. SVB is based in Washington DC since 2009 where it has advised numerous energy and policy leaders, international corporations, think tanks, investment banks, and law firms on the global energy market, the geopolitics of energy and investment patterns.
Oil and Gas Journal: November 29, 2018 - Iran’s oil exports likely will remain at 1.1-1.3 million b/d for the rest of this year despite waivers the US government granted to eight countries after imposing US sanctions on Iranian oil sales, said Sara Vakhshouri, president of SVB Energy International in Washington, DC. Iran has said its November oil sales were about 1.1 million b/d. SVB Energy listed the eight countries having waivers as China, India, Japan, South Korea, Taiwan, Turkey, Greece, and Italy. In early November, US President Donald Trump’s administration fully imposed new sanctions on Iran. In May, Trump announced a US exit from an international agreement that had lifted earlier sanctions against Iran by an alliance of countries in exchange for Iran’s cooperation on its nuclear program. The sanctions are unilateral, but US officials are asking other countries to buy less oil from Iran. Some traders and analysts have suggested the waivers could increase Iran’s oil exports, but Vakhshouri said she believes that will not happen through Dec. 31 for lack of Iranian shipping capacity. “We could expect a slight export rise of 100,000-200,000 b/d from the month of January, mostly going to Japan and South Korea,” Vakhshouri said of Iran’s exports. “The only game changer would be China-US tariff negotiations, and if China decides to increase its imports back to normal volume of 550,000-650,000 b/d.” Most Iranian tankers are delivering oil to Asia so not much extra shipping capacity is left for deliveries of Iranian crude to the European Union, she said. India most likely will continue importing 280,000-300,000 b/d of Iranian oil, Vakhshouri said, adding she expects that Turkey will continue importing 100,000-120,000 b/d up to a maximum of 150,000 b/d. Iran’s condensate production will remain as it is, with most condensate exports going to South Korea, she said.
The Wall Street Journal: November 23, 2018 - Energy independence from Iran “was in Iraq’s interest before it became a demand from any other side,” said Kadhim al-Hassani, an economic adviser to Mr. Abdul-Mahdi who led a delegation that negotiated sanctions relief with the U.S. The sanctions “accelerated our steps.” It could take over a year for Iraq to develop new ways of generating or importing natural gas, said Sara Vakhshouri, president of Washington-based consulting firm SVB Energy International. Iraq imports enough electricity from Iran to power almost 1 million homes a year and buys 28 million cubic meters of Iranian gas every day—roughly the amount that Massachusetts consumes daily.
Wall Street Journal: November 16, 2018 - The lack of detail about the size of the waivers is “confusing for markets,” said Sara Vakhshouri, president of Washington-based consulting firm SVB Energy International.
Aljazeera: November 11, 2018 - Eight countries have been given a six-month waiver to trade with Iran: China, Taiwan, India, South Korea, Greece, Italy, Japan and Turkey. That helped to keep the lid on any global oil price disruption, for now. While the US tries to use its currency as a weapon, "all of the eight countries that are importing oil from Iran - none of them are going to give any types of currency back to Iran," explains Dr Sara Vakhshouri, founder and president of SVB Energy International. "Iran can only import humanitarian goods or necessary goods, those goods that are not subject to sanctions back to Iran, so they're kind of bartering for food and medicine." Additionally, the European Union is exploring "specific channels of trade with Iran banking and transactions with Iran, and if these channels are built for more formal or usable ways of working with Iran, this will of course weaken the dollar as a weapon," says Vakhshouri. "Also, Iranians are selling their oil in local currency to these eight countries, so if we push this more or if we want to use [the dollar] as a weapon, it'll lose its influence." But at the same time, "we cannot deny the fact that all of these things have their own consequences on Iran's economy." Major oil producers such as Saudi Arabia and Russia will stand to benefit from Iran's absence in the oil production game, especially in mid-2019 because the market is expecting an over-surplus of oil. However, Iran's economy is not expected to collapse under the sanctions, contends Vakhshouri. "This is not the first round of sanctions on Iran ... so the Iranian government's psychology is built on living under the sanctions. Their priorities and policies are always shaped based on how they can be more resistant ... Iran's economy can still survive this round of sanctions, but what is really hurting its economy is the domestic corruption and lack of management. But would the sanctions cripple Iran's economy to the extent that the whole system would collapse? We don't expect that."
Gulf News: November 4, 2018 - Meanwhile, Iran’s exports in November is expected to reach to close to 1 million barrels per day (bpd), according to Dr Sara Vakhshouri, president of Washington-based SVB Energy International. “Out of this, we expect about 300,000 to 500,000 bpd going to China, 280 to 300,000 to India, 70 to 150,000 bpd to Turkey and 100 to 180,000 to South Korea.”
S&P Global Platts: November 2, 2018 - China imported 665,000 b/d of Iranian crude and condensates through the first nine months of this year, up from 602,000 b/d in 2017, according to cFlow, S&P Global Platts trade-flow software. In a note Thursday, Sara Vakhshouri, president of SVB Energy International, said she expects roughly 500,000 b/d of Iranian exports to China in November, the majority imported by Zhuhai Zhenrong Corp, a state-owned trading company, and the rest sold to PetroChina and independent refineries.
Oil and Gas Journal: November 2, 2018 - Sara Vakhshouri, president of SVB Energy International in Washington, DC, estimated Iran’s oil production dropped to 3.33 million b/d from 3.51 million b/d during October. She expects that Iran’s November exports will be about 1 million b/d total to China, India, Turkey, and South Korea. “We don’t think that Russia…has a capacity to swap any oil for Iran in China,” Vakhshouri told OGJ via e-mail. “We expect to see higher oil shipments and delivery of oil than what was permitted by US administration under the waivers,” she said. China is expected to continue to be Iran’s biggest oil buyer although the oil may remain in storage, which would comply with US sanctions. “It is important to distinguish sold oil from delivered oil,” she said, adding stored oil is not reflected in the actual market supply of any given month. Separately, US President Donald Trump and his cabinet officials put a positive spin on talks with China, but some analysts doubt the two countries will overcome a trade impasse.
S&P Global Platts: October 31, 2018 - "Iran, like any other major oil exporter, uses tank farms outside of its main land for storing oil in different regions," president of consultancy SVB Energy International Sara Vakhshouri said. "NIOC has moved its storage tank farm hub from the port of Rotterdam to China. This will give closer and quicker access to its customers in Asia."
Foreign Policy: October 22, 2018 - When Iran faced oil sanctions previously, it diverted to storage some of the oil it pumped but couldn’t sell. Something similar appears to be happening this time, said Sara Vakhshouri, a former Iranian oil executive who is now the president of SVB Energy International, an energy consultancy. “Iran in September and October has been storing significant amount of liquid in its floating storages and storage tanks outside of Iran. But not all of these amounts are sold and can be counted as export,” she said.
Al Monitor: October 22, 2018 - Sara Vakhshouri, founder and president of SVB Energy International, told Al-Monitor that the Organization of Petroleum Exporting Countries has 2.64 million barrels a day of spare capacity, of which Saudi Arabia accounts for 1.94 million barrels. She said, “OPEC and Saudi Arabia have already increased their production and not all of this above-mentioned capacity is available.” Russia has also increased production and could increase further. However, “No one has an exact estimate for how long Saudi (and even Russia) can sustain their production at their maximum capacity,” she said. This creates “uncertainty” over the “volume and durability of spare capacity,” which in turn “creates panic in the market and potentially pushes the prices up.” “Use of spare capacity as a cover for Iran oil production would leave no additional capacity in the market to cover for any sudden interruption in the market,” Vakhshouri said. “This again creates panic in the market and leads to higher prices.” Vakshouri said the situation might be mitigated — but only late next year if US export capacity increases as expected by the market.
S&P Global Platts: October 10, 2018 - Sara Vakhshouri, who heads up the consultancy SVB Energy International and follows Iran closely, said she doubted that using the bourse would be very successful, as any international buyers would still likely be subject to US sanctions for dealing with Iranian entities. "This is not going to increase Iran's exports significantly, due to surveillance and monitoring technologies which could track Iran's oil exports," she said.
Wall Street Journal: October 5, 2018 - Tehran’s crude exports fell to 1.5 million barrels a day this September, said Sara Vakhshouri, president of SVB Energy International and a former official at the National Iranian Oil Co. That compares with 2.1 million barrels a day in June.
Oil and Gas Journal: October 3, 2018 - Sara Vakhshouri, president of SVB Energy International in Washington, DC, said Iran’s oil exports fell to a rounded 1.69 million b/d in September from 1.85 million b/d in August. Vakhshouri said Iran is offering steeper discounts on condensate than crude oil. Most of the unsold cargoes in tankers already at sea are condensate because South Korea has halted its purchases of Iranian condensate. Iran has started storing crude oil and condensate in tank farms outside of Iran, she said. Given lower exports, Iran will adjust its production by reducing oil from its southern fields. Almost all of Iran’s the production drop so far has been done in the Southern fields, Vakhshouri said, adding West Karun oil fields production will continue growing. Iran will decide how to adjust its production based on its November exports, she said. She said Iran’s oil production was 3.51 million b/d in September, down from 3.59 million b/d in August.
S&P Global Platts: October 2, 2018 - Recent tanker data had shown a sharp fall in exports to India, but the reappearance of the tankers suggested flows to India may not be as low as preliminary data showed. Such tanker activity may be a sign of things to come. "NITC had started a drill and not all of these ghost tankers have unsold cargoes. They are testing and practicing," the president of consultancy SVB Energy International, Sara Vakhshouri, said. "We are going to see more tankers with AIS off. There will be some ship-to-ship deliveries on the sea and Iran has already started storing oil in its leased tank farms outside of Iran," Vakhshouri said.
Iran Struggles With Unrest in Pivotal Oil Hub
The Wall Street Journal: September 28, 2018 - “People in these areas are producing most of the wealth in Iran but they are not getting their share,” said Sara Vakhshouri, a former official in the National Iranian Oil Co., who now heads the Washington-based consultancy SVB Energy International. That leaves the oil industry “in a very vulnerable situation,” she said. Ms. Vakhshouri said she was aware of 40 “suspicious” incidents such as explosions since December 2015. The government has repeatedly denied any sabotage.
Deutsche Welle: September 21, 2018 - Many observers expect many more big firms to leave Iran. "We expect almost all of the European and Japanese companies along with major Korean companies to leave Iran," Sara Vakhshouri, the president of SVB Energy International in Washington DC, told DW. "This will have a negative impact on Iran's economy and manufacture processes of different industries. On the other hand, Chinese and Russian companies will benefit from lack of competition in Iran but we shouldn't forget that under the nuclear sanctions, Chinese companies took over many projects but most of them remain uncompleted."
European Council on Foreign Relations,: September 20, 2018 - As the US steps up its sanctions against Iran, the negative effects ripple throughout the global energy markets. In the coming weeks, the US administration will intensify its economic pressure on Iran through sanctions designed to curtail the country’s oil exports. Given that these exports account for a significant percentage of state revenue (despite government efforts at economic diversification), the measures will hit Iran hard. Yet the sanctions will also have an impact on energy markets far beyond Iran, and may lead to a rise in global oil prices. Moreover, they could have a negative effect on global energy security by tapping into most of the spare capacity in the market. Since President Donald Trump withdrew the United States from the Iran nuclear deal (formally known as the Joint Comprehensive Plan of Action, or JCPOA) in May this year, US officials have stated that they aim to prevent Iran from exporting any oil whatsoever. Although the second phase of the new US sanctions only come into effect on 4 November, Iranian oil production and exports have already started to decline – partly because the US has issued conflicting statements on whether it will provide sanctions waivers to some importers, and partly because the August 2018 round of US sanctions set restrictions on payments, shipping, and insurance.
Gulf News: September 6, 2018 - Dr Sara Vakhshouri, president of SVB Energy International based in Washington DC said oil exports from Iran have already reduced by about 550,000 to 600,000 barrels per day in August when the first round of US sanctions kicked in. “The figure is likely to go up to 1.4 to 1.5 million barrels per day this month,” she added. “There is a general misunderstanding that Iran’s oil exports will start showing a significant reduction from November 4 onward, but the first round of sanctions will put severe limitation on transactions with Iran and insurance on oil tankers.” Last month, the US administration reimposed the first batch of Iran sanctions since Washington withdrew from the 2015 nuclear deal, with sanctions on oil sales coming into force from November. “Reductions in Iranian oil exports will have a negative impact on Iran’s economy and currency value which ultimately causes a massive inflation in the country.”
OilPrice.com: August 30, 2018 - The Wall Street Journal reported that Iran’s oil exports are falling much faster than most analysts had predicted. While China and the European Union have vowed to continue to help Iran export its oil, it’s an uphill climb for Tehran to prevent supply losses. Banks are backing away from involvement in the trade of Iranian oil, and shippers are having trouble finding insurance for cargoes. European refiners, despite political support for Tehran in Brussels, have already moved to sharply cut purchases of Iranian crude. The result is that Iran’s oil exports are set to plunge this month, after more modest losses in July. The WSJ says, citing data from SVB Energy International, that Iran’s oil exports could fall to 1.66 million barrels per day (mb/d) in August, a massive decline from 2.34 mb/d in July. The consultancy says that Iran’s oil exports could continue to fall precipitously over the coming months, falling as low as 0.8 mb/d in November.
S&P Global Platts: August 23, 2018 - "Saudi Arabia doesn't need the IPO as much as it needed it few years ago," said Sara Vakhshouri, who heads the consultancy SVB International and closely follows Saudi oil policy. "Oil prices are higher, and due to Iran sanctions, [Saudi] market share and ultimately their income will increase further."
S&P Global Platts: August 7, 2018 - "We expect Iran oil exports from September to have a higher rate of decline," president of consultancy SVB Energy International Sara Vakhshouri said. "These sanctions will put severe limitations on transactions with Iran and insurance on oil tankers. All of which will make it hard for Iran to sell its oil."
Oil and Gas Journal: August 7, 2018 - On Nov. 4, US officials will decide whether to issue a waiver to all or specific importers of Iranian oil for 6 months. Sara Vakhshouri of SVB Energy International in Washington, DC, told OGJ she believes Iran’s oil exports will show higher decline in September as buyers of Iranian oil try to avoid antagonizing US officials. “The first round of sanctions…put severe limitation on transactions with Iran and insurance on oil tankers,” making it hard for Iran to sell its oil, Vakhshouri said. She noted that importers of Iranian oil already are reducing oil purchases from Iran to prove to the US government that they markedly reduced their Iranian crude imports by Nov. 4.
Oil and Gas Journal: July 19, 2018 - Sara Vakhshouri, founder and president of SVP International who formerly worked in public and private sectors of Iran’s oil industry, agreed that an uncertain expiration date is troublesome, while lower oil prices currently could become a problem if they start to rise quickly.
Newsweek: June 29, 2018 - Internationally, oil prices have spiked, as the market responds to U.S. demands to cease purchasing Iranian crude. Some experts have warned that prices could rise to more than $90 per barrel, from the current price of just over $70. Speaking to Bloomberg, Sara Vakhshouri, head of Washington, D.C.-based consultant SVB Energy International said that Iran is in “a really horrible position.” According to Vakhshouri’s analysis, “There’s not really much Iran can do to maintain its export level.” At the same time, U.S. allies aren’t on board with Trump’s planned sanctions. Their impact will also have negative repercussions for Europe and other traditional allies, many of whom are already frustrated by the announcement of new U.S. tariffs.
Bloomberg: June 29, 2018 - “Iran is in a really horrible position right now,” said Sara Vakhshouri, head of Washington, D.C.-based consultant SVB Energy International. “There’s not really much Iran can do to maintain its export level.” If the U.S. and China reach a trade agreement, we could expect significant Iran oil-import cuts,” Vakhshouri said.
US expects Iran oil buyers to cut imports to zero by november
Platts Oil Gram News: June 27, 2018 - Sara vakhshouri, president of SvB Energy International, suspects the State Department only announced the no-waiver strategy after securing agreements from Saudi Arabia and russia to increase production later this year to offset the blocked Iranian exports and prevent a price shock. vakhshouri said it also indicates the US/ China trade war may get resolved by November. “Otherwise, the State Department wouldn’t be confident on having China stop importing oil from Iran,” she said.
Oil and Gas Journal: June 27, 2018 - Sara Vakhshouri, president of SVB Energy International in Washington, DC, told OGJ that the Trump administration is forming a trade alliance against Iran by using the pending sanctions as a component of US trade negotiations with members of the European Union and China. She also noted oil market participants are very sensitive right now to any supply disruptions or geopolitical threats. Traders are worried about how much spare capacity exists.
Arab Weekly: June 24, 2018 - Another Middle East Institute panellist said US sanctions would benefit many countries by compelling them to increase oil and gas production. “Having sanctions on Iran is not really hurting anyone. It creates market share for oil producers,” said Sara Vakhshouri, president of SVB Energy International who worked for the National Iranian Oil Company from 2000-08. “Having sanctions on Iran will profit many countries and doesn’t bother the rest.”
Oil and Gas Journal: June 4, 2018 - Iran started preparing to increase production after the international agreement was announced in June 2015. Production then increased in January 2016 upon removal of the export ban. In 2017, production grew by about 45,000 b/d. Production capacity of the southern oil fields is expected to rise another 55,000 b/d by June 2019. Less developed fields also contribute to increased production. Table 4 shows most of Iran’s new oil production will come from the recently developed West Karun fields where production averaged 260,000 b/d in 2016, up from 100,000 b/d in 2015. Peak West Karun production during 2016 reached 280,000 b/d for the month of October. Production reached 345,000 b/d by December 2017 and is expected to reach 380,000 b/d by mid-2018. With no interruptions, Iran could increase production 180,000 b/d by mid-2019, of which 125,000 b/d would be from West Karun oil field and the rest from southern oil fields. If Iran’s upstream projects proceed as planned, production could reach 550,000 b/d by the late 2019 and 700,000 b/d by 2021.
Oil and Gas Journal: May 25, 2018 - Sara Vakhshouri of SVB Energy International in Washington, DC, said US unilateral sanctions against Iran are scheduled to take effect Nov. 4. She had expected OPEC was to increase its production before that. “The OPEC agreement is critical for the effectiveness and implementation of US sanctions on Iran oil expects,” Vakhshouri said.
Oil & Gas Journal: May 14, 2018 - US economic sanctions are to be imposed on Iran. Meanwhile, the European Union is talking with Iran, encouraging Iran to maintain compliance with terms of the 2015 international agreement, said Sara Vakhshouri, president of SVB Energy International in Washington, DC. “Refiners will usually have about 180 days to report import cuts from Iran,” she said. “This gives enough time for the Organization of Petroleum Exporting Countries to adjust its production and supply.” Vakhshouri said SVB Energy expects Iran’s oil exports could be reduced 200,000-500,000 b/d by Dec. 31. Iran’s export cuts could reach 800,000-1 million b/d by about June 2019, she forecast.
LobeLog: May 14, 2018 - Sara Vakhshouri, president of the energy consulting firm SVB Energy International, believes that at least when it comes to oil sanctions—the sanctions that are likely to be the most immediately painful to the Iranian economy—European firms are already well prepared to divest themselves of any Iranian ties: Because of the experience they had under the 2012-2016 nuclear sanctions, European companies are very ready to implement the sanctions. Companies that are importing Iranian oil are already looking for alternative sources. There hasn’t been much investment in Iran [from European energy companies] except for [French oil giant] Total, and they’re ready to come out. Some other companies have signed MOUs, but they don’t aren’t legally binding. Other companies decided they didn’t want to have anything to do with Iran. As opposed to the pre-JCPOA period—during which, Vakhshouri says, “the U.S. State Department had to go to a lot of effort to get these companies to comply” with U.S oil sanctions against Iran, “this time, they already know the consequences for failing to comply.” Additionally, changes in the global oil market and the struggles foreign firms have had navigating Iran’s business environment have made Iran a less important oil supplier and a less attractive target for energy investment: Now we have significant U.S. shale oil and gas resources, for example, and there are other options for investors. The lower price of oil has changed the way investors view the market. So they are not seeing so much benefit from Iran that they would be willing to risk sanctions. Back in 2012, when the price of oil was very high, Iran could offer to discount its price and make a big difference for importers. Now the global price is low enough that incentivizing in that way doesn’t really make a big difference. The other issue is that, in the past two years, Iran hasn’t really done anything to make it more attractive to invest in its oil industry. The Iranians talked about improving regulations to make them more welcoming to foreign investors, but when the sanctions came off in 2016 they just assumed that companies were dying to invest in Iran. But many companies have not invested in Iran because of its contracting system, not just because of sanctions. Business in Iran is risky and unprofitable, so it won’t be hard for Trump to reimpose sanctions and get European firms to honor them. Vakhshouri sees two potential scenarios for the EU’s approach toward Iran and the nuclear deal moving forward. In one, when Trump’s six-month wind-down period ends, European leaders are still committed to maintaining the accord. They could offer incentives to firms to do business in Iran, but in Vakhshouri’s view “this would not amount to much, just enough to motivate Iran to preserve the JCPOA.” The second scenario, which she says is “more likely to happen,” is bleaker from both the Iranian and pro-JCPOA perspectives. In this scenario, after the next 180 days the EU is aligned with the U.S., not with regard to Iran’s nuclear program but with regard to Iran’s missile program. This is what [French President Emmanuel] Macron and Trump were discussing last month. Macron was trying to convince Trump to wait, that the U.S. and Europe could pressure Iran to make another deal around its missile program. But Trump obviously had fundamental problems with the nuclear deal and they weren’t able to work it out, so he reimposed sanctions. Immediately after Trump announced his decision, Israel started launching missiles [against Iranian targets in Syria], so it looks like they’re trying to provoke Iran to retaliate. If that happens, then the world will unite against Iran’s missile program. That would mean reimposing the nuclear sanctions or even harder sanctions.
S&P Global Platts: May 11, 2018 - 200,000-500,000 b/d of Iranian production will be shut in by Q1 2019, rising to 900,000-1 million b/d by mid-2019 if no new deal is reached, said Sara Vakhshouri, president of SVB Energy International.
Deutsche Welle: May 11, 2018 - "The sanctions could significantly reduce Iran's oil revenue, making it hard to have access to its oil revenue in cash and could push Iran to have oil for goods and services deals," Sara Vakhshouri, the head of Washington-based consultancy SVB Energy, told DW.
Bloomberg: May 10, 2018 - Trump going after Iran’s oil sales, “the type of currency Iran receives can’t save its export volumes,” said Sara Vakhshouri, head of Washington-based consultancy SVB Energy. “Receiving payments in euros only partially immunizes Iran’s oil exports from U.S. sanctions.”
S&P Global Platts: May 10, 2018 - Sara Vakhshouri, president of SVB Energy International, agreed that US enforcement will depend on oil prices, with the administration likely being comfortable pressing Iranian oil buyers to make additional reductions as long as oil prices stay around $80/b. A price spike that sends prices much above that level would set off alarms in Congress as voters feel the pinch of retail pump prices during peak summer driving season. She pointed to President Donald Trump's April 20 tweet blasting OPEC for "artificially very high" prices after Saudi Arabia's reported desire for $100/b oil. "It's very much dependent on Saudi," Vakhshouri said. "If Saudi doesn't want to cover for Iran, the prices could go higher, of course. Then maybe Treasury starts to adjust the reductions." The level of import reductions will also depend on how the Treasury Department treats condensates. If it considers them as part of a country's total reductions, then cuts will be easier for some countries, analysts said.
Oil majors weigh lost opportunities in Iran
S&P Global Platts, OILGRAM NEWS: May 10, 2018 - Since the 2016 sanctions deal, “There hasn’t been any significant investment in Iran’s energy industry, especially the upstream,” Sara Vakshouri, president of consultancy SVB Energy International said. “This is for three reasons: limitations and problems with using the international banking system and dollar transactions for investments, reputation risk and risk of future sanctions.” A senior official at an Indian refiner said Iranian crude imports were unlikely to be affected because of the sanctions. “This entire thing has to be studied and more clarity needs to emerge, but I don’t see any big drop in Iranian crude supplies to India immediately,” the source said. “China and India have already received many incentives and discounts from Iran on their oil purchases, hence, they will try to reduce their production gradually and in lower quantities [than South Korea and Japan],” said Sara Vakhshouri, president of SVB Energy International.
Oil & Gas Journal: May 9, 2018 - Sara Vakhshouri, president of SVB Energy International, said US sanctions will not be as effective as were sanctions imposed by an international alliance from 2012-16. “In 2012, EU started the oil import bank and sanctions on tanker insurance,” Vakhshouri said. “This time, EU will try to encourage Iran to maintain its compliance with JCPOA.” She noted that from the time new US sanctions are implemented, it will take up to 180 days before world oil markets experience a result on world oil supply. Refiners will have about 180 days to report lower imports from Iran, Vakhshouri said. “Based on our field studies, we estimate that Iran has the technical potential to increase its oil production capacity about 120,000-180,000 b/d by mid-2019 if there is not limitation on its exports,” which could force reduced Iranian production, she said.
Foreign Policy: May 8, 2018 - “If the United States puts sanctions on Iranian oil exports, it won’t be as effective as back in 2012, simply because there is not an agreement between the major powers — the U.S. and the EU — over implementing sanctions on Iran because of its nuclear program,” says Sara Vakhshouri, an expert formerly of the Iranian national oil company and now head of SVB Energy International, a consultancy.
Oil and Gas Journal: April 25, 2018 - “The recent Trump-Macron meeting indicates that US officials and the European Union have found the middle ground to renegotiate the deal, which was Trump’s demand from the beginning,” said Sara Vakhshouri, president of SVB Energy International in Washington. “Among all EU members, France was the first and most critique of Iran’s missile program,” she wrote in an Apr. 25 e-mail to OGJ. “Now the ball is in Iran’s hands to decide whether it wants to renegotiate the deal or not.” She suggests that “this whole renegotiation process might delay the reappointment of the sanctions by Trump and buys more time for Iran.”
Oil Price: April 21, 2018 - Sara Vakshouri, head of consultancy SVB Energy International, told Platts that this move could be an attempt to curb the impact of fresh sanctions by taking the dollar out of transactions, but it is unlikely to completely protect Iran from sanctions. “With regard to the oil purchases, as part of its market share policy under sanctions, Iran might agree to receive its oil payments in the local currency of the importers or to received goods and/or services in return for its oil,” Vakshouri told Platts, but noted that Iran’s economy as a whole would be affected even if Tehran is able to continue selling oil internationally. “Unilateral and multilateral restrictions and sanctions will have their own negative impacts on Iran’s economy, even if it is still able to continue oil exports”, Vakshouri noted.
S&P Platts: April 19, 2018 - Sara Vakshouri, who heads the consultancy SVB Energy International, believes the announcement could be an attempt to limit the impact of sanctions by removing the dollar from transactions. "This will not protect Iran against the sanctions completely," Vakshouri added. "With regard to the oil purchases, as part of its market share policy under sanctions, Iran might agree to receive its oil payments in the local currency of the importers or to received goods and/or services in return for its oil." "Unilateral and multilateral restrictions and sanctions will have their own negative impacts on Iran's economy, even if it is still able to continue oil exports", Vakshouri said.
Entrepreneur: Jan. 25, 2018 - Sara Vakhshouri, President, SVB Energy International, is very optimistic about Prime Minister Narendra Modi's energy plan and said the schemes will create investment opportunities for both Indian and international players in the energy space. The senior executive was referring to PM Modi's plan of increasing India's renewable capacity to 175 GW by 2022, which includes 100 GW from solar power, 60 GW from wind power, 10 GW from biopower and 5 GW from small hydropower. Furthermore, she also mentioned Pradhan Mantri Sahaj Bijli Har Ghar Yojana (PM's Power for All program) or Saubhagya scheme, which aims to provide electrical connections to over 40 million families in rural and urban areas by December 2018 and free electricity to households below the poverty line (BPL). Vakhshouri said such programs will open doors for entrepreneurs/investors in the whole grid process that are used to bring electricity from the production house to end consumers. Meanwhile, Washington-based SVB Energy International offers market research and strategic advisory services within the energy sector, especially for countries like Iran, Saudi Arabia, India, and Mexico. Their target audiences are mostly American companies and investors.
Saudi arabia’s reforms face backlash risk
S&P Platts OILGRAM NEWS: Jan. 4, 2018 - “Through his reforms, MBS is trying to build the required institutions to be able to manage the key issues in the Kingdom. The Aramco IPO and campaign against the domestic corruption are all the initial steps to lay the ground for building ‘independent’ institutions,” said Sara Vakhshouri, head of consultancy SVB Energy International and a fellow at the Atlantic Council who follows Saudi policy closely.