Asian imports of Iranian crude rose to the highest level this year in May, although buyers may have to curb any further increases if negotiators up against a deadline fail to reach a final deal on Tehran’s disputed nuclear programme.

A deal between Iran and six world powers would resolve a
12-year standoff over the Islamic nation’s nuclear work in
exchange for relief from sanctions, which could eventually send
millions of barrels flooding into an already saturated market.

Iran has as much as 40 million barrels of oil stored in
tankers and aims to increase output by 500,000 b/d within a month of sanctions being lifted and up to 1 million b/d within six or seven months.

Iran, the United States, Britain, France, Germany, Russia
and China reached a tentative framework for a nuclear pact on
April 2 but several issues remain unresolved. They have a
self-imposed June 30 deadline to arrive at a comprehensive
agreement and talks are now expected to stretch into July.

“I think we will probably have to wait six months till we
see officially sanctioned exports out of Iran going forward,”
said David Fyfe, head of market research and analysis at Gunvor
in Singapore.

Imports by Iran’s four biggest buyers – China, India, Japan
and South Korea – totalled 1.2 million b/d last month, down 1.9% from a year ago and the highest since 1.21 million b/d
in December, government and tanker-tracking data showed.

The imports have been slowly creeping up this year, but a
failure to reach a deal this week would likely mean monthly
shipments would be brought back closer to the about 1 million
b/d currently allowed by sanctions.

Iran is keen to recover market share lost under the U.S. and
European Union sanctions that curbed its exports to around that
level by the end of 2013, from 2.5 million b/d in 2011.

“If oil-related sanctions are lifted, Iran will look to regain export market share, competing with other OPEC members,”
said Alexander Metelitsa, analyst at the U.S. Energy Information
Administration (EIA).

Over the first five months of 2015 Asian buyers took in just
over a million b/d.

In May, all buyers except China increased their purchases of
Iranian oil, with the Chinese shipments hitting the lowest in
four months as overall crude imports dropped during the
country’s spring refinery maintenance season.

Japan’s purchases rose 5% in May from a year earlier
to 190,924 b/d, trade ministry data showed on Tuesday. South
Korean imports nearly doubled, according to data released
earlier.

India’s imports of Iranian crude oil rose 66% from a
year earlier in to their highest level since March 2014. Two
months earlier India had imported no oil from Iran for the first
time in at least a decade.

The following tables show Asia’s Iran crude imports in b/d
for May and the year to date.

Country            May-15        May-14    yr/yr pct
China             518,400       757,900        -31.6
India             368,000       221,600         66.1
Japan             190,924       181,892            5
S. Korea          128,041        67,230         90.5
Total           1,205,365     1,228,622         -1.9

Country      Jan-May 2015  Jan-May 2014    yr/yr pct
China             573,100       646,856        -11.4
India             203,100       303,600          -33
Japan             188,649       168,870         11.7
S. Korea          119,395       121,868           -2
Total           1,084,244     1,241,194        -12.6

Source: Reuters