By Ron Bousso
LONDON (Reuters) – Mediterranean refiners are gearing up to welcome the return of Iranian crude oil to the market which could push prices lower & boost profits following the easing of Western sanctions under a landmark nuclear deal.
Iran's crude exports were a regular fixture for European refineries before Western sanctions were imposed on the key OPEC producer in 2012 over its nuclear program, halving its exports to just over 1 million barrels per day.
p> "Iran has been a long standing valued partner … We are looking forward to Iran coming back to the market," said a spokesman for Greece's biggest refiner Hellenic Petroleum , stressing that they will not buy any crude before sanctions are officially lifted.
"The volumes of crude oil that will re-enter the Mediterranean market will ease prices & donate more options for refiners in the region," he added.
Though there were no details on how sanctions on oil will be eased, Iranian officials indicated they would try to maximize crude exports to Europe & restore a market share of over 40 percent there.
Analysts expect the deal could see Iran increase its oil exports by up to 60 percent within a year.
Additional volumes of crude would only pile pressure on a market already facing a large oversupply. For refiners, however, cheaper feedstock means higher profit.
Iranian crude accounted for around one quarter of Hellenic's crude oil intake before 2012, & just like many Mediterranean refiners, it is geared up for Iranian crude.
European oil buyers, including Italy's Eni & Saras have held talks with National Iranian Oil Company (NIOC) officials in Europe & Tehran over the past year in anticipation of sanctions being eased.
A spokeswoman for Spain's Compania Espanola de Petroleos (CEPSA) said "Iranian crude has largely been part of our supply & we maintained a long commercial relationship with them."
"If sanctions are lifted, as it seems, Iranian crudes will definitively be again another alternative to consider," CEPSA told Reuters in a statement.
A spokesman for Saras said the independent refiner "would be delighted if Iranian oil comes back to the market, as its quality is very absorbing for complex & flexible refineries like ours".
Asian buyers, notably China, India & Japan, have continued to buy limited volumes of Iranian crude in recent years.
"Two to three months from now, you will probably see some Iranian crude coming to Europe & Asia," said Eshan Ul-Haq, senior market consultant with KBC, which expects Iran's export to rise over that period by 300-400,000 bpd, of which 150,000 bpd is expected to reach Europe.
"It would mean cheaper crude for Mediterranean refineries, especially smaller countries that have been impacted by economic problems â€“ like Greece," Ul-Haq said.
Royal Dutch Shell , whose officials recently held talks in Tehran on future cooperation & the repayment of the Anglo-Dutch company's $2 billion debt said on Tuesday it was interested in doing business in Iran.
"Strictly within the boundaries of the law, we are interested in exploring the role Shell can play in developing Iran's energy potential," a spokeswoman said.
(Additional reporting by Libby George, editing by David Evans)