Western sanctions drove Iran’s crude exports to the lowest in decades in May, according to industry sources and tanker-tracking data, even before Washington toughens measures aimed at squeezing oil sales further.

Crude shipments dropped to 700,000 barrels per day (bpd) last month, the data from sources showed, about a third of Iran’s oil exports before the current round of sanctions.

U.S. and European sanctions aimed at pressuring Tehran over its suspected pursuit of nuclear weapons have already more than halved Iran’s shipments – costing Iran billions of dollars in revenue since the start of 2012. And Washington is now seeking to cut shipments to less than 500,000 bpd through tighter sanctions.

Purchases by major Asian customers last month were about 12 percent down on April, industry sources said. Sales in April had already taken a hit after Japan, the world’s third-biggest oil consumer, almost stopped Iranian imports entirely.

Oil sanctions are one of the main tools Washington is using to choke off funding to Tehran’s nuclear programme. Countries in the West suspect its purpose is to seek the capability to make nuclear weapons. Iran says the programme is for generating power and medical devices.

With oil trading just above $100 a barrel, the decline in May exports versus April would mean a loss of more than $300 million for Iran, squeezing revenue for a nation that has already seen its currency plunge.

The drop in purchases in May, if confirmed by official import data, would increase the prospect of Washington granting Tehran’s top buyers more leeway to avoid U.S. penalties even if they maintain Iranian oil purchases.

The United States is expected to renew waivers on Iran oil sanctions for India, China and several other countries as soon as Wednesday.

Before the latest sanctions, Tehran sold about 2.2 million bpd of crude mainly to Asia, Europe and Africa.

The steepest cuts in April had been made by Japan, amid uncertainty about whether sovereign insurance for tankers carrying Iranian oil would be extended beyond March.

At just 7,549 bpd, imports from Iran were down 96 percent from the same month a year ago and the lowest since Japan imported no Iranian crude in July 2012.

EXPORTS SLIDE

Tokyo began offering insurance guarantees in June last year after top reinsurers, mostly based in Europe, halted their cover for ships carrying Iranian crude due to sanctions.

A Japanese transport ministry official in charge of the scheme said new contracts covering three tankers were signed on April 1, compared with 13 that were covered up to March 31. The number has subsequently risen to 8.

That indicates May imports were lower than a year earlier, because fewer ships were eligible to load Iranian oil. Loadings in May likely fell versus April, industry sources familiar with Iranian crude shipments said. One source pegged the volume at 120,000-130,000 bpd, about 60,000-100,000 bpd lower than April.

Imports in May by South Korea, another of Iran’s top customers, likely fell from April’s 139,400 bpd – already down nearly 45 percent from a year ago.

Of the two Korean refiners – SK Energy and Hyundai Oilbank – which import Iranian crude, Hyundai receives cargoes once every two months and is unlikely to have imported anything in May.

China, Iran’s biggest buyer, purchased about 371,500 bpd in April, down 4.3 percent from a year earlier. Shipments were likely to hold steady in May and June, a regular buyer said.

India’s purchases could average about 190,000 bpd spread over April and May, based on industry and a preliminary tanker arrival data. That’s about a quarter less than the 250,600 bpd imported on average in the first three months of the year.

Turkey is expected to import the same amount in May and June, roughly 100,000 bpd in three cargoes, as has been the case in the past 9 months.

Reuters