Iran’s oil exports are falling as Russia, closed out of European markets because of its invasion of Ukraine, competes for Asian buyers.

Exports have fallen to 775,000 barrels per day from 1 million earlier this year, primarily because of reduced demand from China despite Iran’s heavily discounting its price.

Tehran exported about 2.5 million bpd in 2018 before the US imposed comprehensive sanctions on Iran’s energy sector.

Iran’s daily production output is about 2.8 million bpd. Oil Minister Javad Owji has declared that Tehran has the capacity to pump 4 million bpd and hopes to reach 5.7 million.

ORIGINAL ENTRY, JUNE 15: Iran’s oil exports to Asia have been halved amid Russia’s invasion of Ukraine.

With its markets in Europe under threat of being reduced or even cut off, Moscow is turning to Asia, offering oil at discounts of about $30 per barrel. That has squeezed out Iran’s supplies, which are discounted by about $20.

According to Kpler, which tracks oil tankers, preliminary estimates indicate Iran loaded about 400,000 barrels per day of condensate in May for Asian markets, compared with 820,000 barrels in April and 908,000 barrels in March.

About 40 million barrels of Iranian oil is now stored on 20 tankers waiting for customers, compared to 22 million barrels in early April.

Iran’s exports to China were estimated at 700,000 to 900,000 bpd in March, but fell by between 200,000 and 250,000 bpd in April.

Meanwhile, China’s import of oil from the Russian Urals more than tripled.

“Nobody’s looking at Iranian crude anymore as Russian grades are of much better quality and at lower prices. Iranian oil sellers are under severe pressure,” said a trader with a Chinese refiner.

Stung by the reports, Iran’s Raisi Government declared that it is now exporting more than 1 million bpd per day. But that figure is still 60% below Iranian exports of 2.5 million bpd in early 2018.