Iran's oil exports have fallen sharply since US President Donald Trump said at mid-year he would reimpose sanctions on Tehran, but with waivers in hand the Islamic Republic's major buyers are already planning to scale up orders again.
The original aim of the sanctions was to cut Iran's oil exports as much as possible, to quash its nuclear and ballistic missile programmes, and curb its support for militant proxies, particularly in Syria, Yemen and Lebanon.
But the exemptions granted to Iran's biggest oil clients - China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey - allow them to import at least some oil for another 180 days and could mean exports start to rise after November.
This group of eight buyers imported over 80 percent of Iran's roughly 2.6 million barrels per day (bpd) of oil exports last year, Refiniv Eikon data shows.
"The decision by the US (to grant waivers) represents a departure, for now, from the stated aim of reducing Iran's oil exports to zero," said Pat Thaker, regional director for the Middle East and Africa at the Economist Intelligence Unit.
Iran's crude exports have fallen significantly from at least 2.5 million bpd in April, before Trump in May withdrew the United States from a 2015 nuclear deal with Iran and reimposed sanctions, although estimates vary.
As a result of pre-sanctions pressure by Washington, Iran's oil exports in November may not exceed 1 million to 1.5 million bpd, according to industry estimates. Companies that monitor Iran's shipments are already seeing a drop in tanker activity this month.
"We've only seen 10 tankers loading at, or signaling for Iranian terminals in November so far, which is significantly lower than what we usually see at the beginning of the month," said Kpler, a data intelligence company.
According to Refinitiv Eikon data, Iranian crude exports have fallen to 1 million bpd so far in November.
An industry source who also monitors such shipments said the figure was likely to be on the low side.
Iran expects to maintain crude exports of at least 1.1 million bpd after the reimposition of sanctions, a source familiar with Iranian thinking said, as the global market is too tight to allow a full stoppage.
In October, Iran's crude exports were estimated at 1.82 million bpd by Kpler and 1.5 million bpd by another firm that monitors Iranian shipments.
Japan To Resume
Japan's trade minister, Hiroshige Seko, said on Tuesday that Japanese buyers of Iranian oil were expected to resume imports from the Islamic Republic after the country received a waiver from US sanctions.
S&P Global Platts reported on Tuesday that South Korea would be able to take around 4 million barrels a month (130,000 bpd) of Iranian crude and condensate under a U.S. sanctions waiver.
Japan and South Korea, close U.S. allies, had toed the Washington sanctions line and stopped buying crude from Iran.
India, Iran's second-biggest oil customer, also cut orders ahead of the sanctions, hoping its effort to reduce reliance on Tehran would pay off in Washington and win it a waiver once the sanctions restarted.
Even China, locked in a bitter trade war with the United States, bowed to pressure from Washington and dialled back imports.
Taking The Sting Out Of Sanctions
Trading sources said several Asian oil importers were looking to increase their orders for Iranian oil soon.
Two Chinese sources familiar with the matter said the country would be allowed to buy 360,000 bpd of Iranian crude during the exemption period.
That would be about half the daily average China has been importing from Iran since January 2016, trade data showed.
One of the sources said the United States had attached some strings to the import allowance, including counterparty disclosures and laying open settlement methods, which were being evaluated before placing new orders with Iran.
Both sources were not permitted to talk to the media about Iran sanctions and declined to be identified.
A merchant trader, who also declined to be named, said "enquiries for cargoes from Iran are ... coming in from several Asian buyers".
The wide-ranging exemptions have reduced fears of a supply shortage, taking pressure off companies, governments and economies around the world that have struggled with the surging cost of fuel.
Trump, facing crucial midterm elections that may cost Republicans control of the U.S. Congress, said on Monday he wants to impose sanctions on Iran's oil gradually, citing concerns about shocking markets and causing global price spikes.
That has helped to take the sting out of the sanctions threat, which helped to lift international benchmark Brent crude futures to four-year highs of almost $87 a barrel in early October.
Brent prices are now about 15 percent lower than that peak and have barely budged over the last two sessions.
Now it will be key to watch "what happens after the exemptions expire in 180 days," the merchant trader said.
Iran's oil exports rose sharply after the previous round of sanctions were lifted in early 2016. Including condensate, an ultra-light form of crude, shipments peaked around 3 million bpd in mid-2018, according to trade data in Refinitiv Eikon.