Reuters Geneva/Dubai

Iran’s crude oil exports in December leapt to their highest level since European Union sanctions took effect last July, analysts and shipping sources said, as strong Chinese demand and tanker fleet expansion helped the Opec member dodge sanctions.

Exports rose to around 1.4mn bpd in December, according to two industry sources and shipping and customs data compiled by Reuters on a country-by-country basis and corroborated by other sources and consultants.

The sources said they expected exports to dip in January from the December peak ahead of new US sanctions.

Western sanctions aimed at curbing Iran’s disputed nuclear programme halved Iran’s oil exports in 2012 from 2.2mn bpd in late 2011, leading to billions of dollars in lost revenue and a plunge in the Iranian currency.

But continuous robust demand from top buyer China and others such as India and Japan, as well as the purchase of new tankers, allowed Iran to unexpectedly boost exports late last year.

The US and the EU are hoping the economic pressure will force Iran to address international concerns about its nuclear programme, which Tehran insists is for peaceful purposes but the West suspects is for making weapons.

Salar Moradi, oil market analyst at oil and gas consultancy FGE, estimated that Iran shipped more than 1.4mn bpd of crude oil in December and forecast that exports would remain between 1.1mn-1.3mn bpd in the first quarter of 2013.

This represents an increase from a low-point of less than 900,000 bpd in September and suggests monthly revenues worth approximately $4.7bn based on December Brent prices.

“They (Iran) bought a number of tankers from China and can now do more deliveries ... It’s taken some pressure off Iran and facilitated tanker traffic and we are seeing higher exports to China,” he told Reuters this week.

The second industry source said the rise in exports to near 1.4mn bpd was a result of traditional buyers finding new ways to secure shipping insurance.

But, like FGE, he estimated that they would fall slightly to around 1.3mn bpd in January.

Chinese data showed the country bought 593,400 bpd of Iranian crude in December, the second-highest level of daily imports in 2012, a rise that Chinese officials also attributed to an easing of shipping delays.

Previously, Iran’s tanker fleet had struggled to meet delivery schedules to China because EU measures in July barred Europe-based insurers from covering tankers that carry Iranian oil.

India’s imports of Iranian crude were up 29% in December from November at around 275,000 bpd, according to tanker arrival data.

Tracking Iranian shipments has become increasingly difficult as companies have sought to conceal tanker movements from Western governments by turning off satellite signals.

Estimates of Iran’s monthly crude exports can vary considerably and are frequently revised.

A fresh round of US sanctions coming into force next month could cap Iran’s exports in the coming months as some buyers balk at the prospect of falling foul of the measures.

From February 6, US law will prevent Iran from repatriating earnings it gets from its shrinking oil export trade, a powerful sanction that the US officials say will “lock up” a substantial amount of Tehran’s funds.

The International Energy Agency in December forecast a drop in Iranian exports to around 1mn barrels per day in late 2012 and early 2013.

But no matter how many rounds of sanctions are in effect, they are never watertight. Iran found creative ways to market its products and managed to sell more than 1.3mn tonnes of its fuel oil last summer, generating revenues equal to up to a third of its crude exports.

However, the latest data showed fuel oil exports have also taken a dip from the average 648,000 tonnes from July to October.

Exports fell to approximately 230,000-330,000 tonnes in December, Salar Moradi said, although he attributed this partly to higher domestic consumption in winter as utilities switch to fuel oil to replace gas used to meet heating requirements in the country.

In a more conservative estimate, data from a firm tracking Iranian fuel oil shipments showed that December exports were around 150,000 tonnes.

Dubai government-owned Emirates National Oil Co (ENOC) has started importing condensate from Qatar to replace sanctioned Iranian oil and is close to finalising deals with other producers, the company said on Sunday.

Still, some analysts think Iran will continue to find ways to safeguard against significant drops in its oil revenues.

“What we have seen is that when Iran is pushed to a do or die situation, they have looked for creative solutions to get around sanctions,” said McGovern.

“The system will always find a way to cope.”