Iran increased its exports of gasoline in March-July as it worked to manage a growing surplus of the fuel at home as a result of sanctions and a slump in domestic demand caused by the Covid-19 pandemic.
Demand in Iran continues to be pressured as the authorities urge people to limit non-essential travel and gatherings in an effort to contain the pandemic. Iran has been worst hit by the pandemic in the Mideast Gulf, so far registering nearly 347,800 cases and 19,970 deaths.
Gasoline consumption is now 410,000-440,000 b/d, the president of the state-controlled Association of Petroleum Product Distribution Chain Companies Nasser Raisi-fard said at the beginning of August. That is down by 15pc from June, when there was a brief recovery following an easing of lockdown measures.
In the first few weeks of the outbreak in March, Iran's government imposed bans on domestic travel and enforced social distancing across the country, and gasoline consumption fell to 313,000 b/d in April, according to Iran's state-owned oil products distributor NIOPDC, sharply down from 475,000 b/d in December.
Iran's domestic gasoline production capacity stands at around 692,000 b/d, up from around 530,000 b/d in mid-2018, in large part on the progress being made at the four-phase 480,000 b/d Persian Gulf Star condensate splitter project at Bandar Abbas.
As a result of of the Covid-19-induced fall in demand, Iran has been scrambling to find additional storage options to house at least some of the oversupply that can no longer be readily exported because of US sanctions that were reimposed on imports of Iran's crude, condensate and oil products in 2018.
Despite the sanctions, industry data indicates that Iran has not only managed to continue exporting some volumes, but actually boosted exports almost three-fold in March-July from January-February, to help counter the slump in demand at home.
Data from consultancy FGE put total gasoline exports in March-July at 173,000 b/d on average, up from around 30,000 b/d in January-February. The majority of these exports are going overland to Pakistan and Iraq.
Overland gasoline exports are forecast to have peaked this year at 172,000 b/d in June, according to FGE, up from just 25,000 b/d in the first two months of the year.
Iran only became a net gasoline exporter in February 2019, after the inauguration of the third 120,000 b/d phase of the PGS project. The fourth phase is scheduled for completion by September.
Despite several months of measures, the pandemic situation in Iran is not showing much sign of improvement. Official data from the health ministry show that daily infections have generally remained between 2,250 and 2,600 since the beginning of June.
But instead of tightening restrictions to contain the spread, the authorities in Iran appear to have accepted that this is not practical in the long-run, given the dire economic situation that the country already found itself in, prior to the pandemic.
"It is impossible to keep stringent restrictions in place and we cannot completely shut down economic, educational and cultural activities," Iran's president Hassan Rohani said.
With this, FGE forecasts domestic gasoline demand will recover in the second half of the year, reaching an average of 520,000 b/d in August-September. For 2020 as a whole, it sees demand averaging 472,000 b/d.
