Iran is set to benefit from a relaxation in sanctions that have restricted oil and urea exports. The temporary removal of certain sanctions was first announced by the P5+1 countries at the end of November, with the intention restated ahead of the World Economic Forum meeting in Davos last week.
The latest interim accord will see “limited, temporary and targeted relief” from sanctions impacting Iran’s financial and energy sectors in exchange for Iran curbing uranium enrichment. The relief is valued at up to $7 billion.
Despite the sanctions, Iran announced earlier in the month that the country exported $8 billion worth of non-oil petrochemical products between 21 March and 20 December 2013. Methanol and urea exports were valued at $877m and $866m respectively. (Coverage from the FARS News Agency is here).
With regard to nitrogen fertilizers, Iranian ammonia and urea exports have been increasingly restricted in recent years as sanctions have tightened. Iran has been a major supplier of urea to India at low prices as it has been unable to access other markets. The eventual removal of sanctions could see the product competing freely in other markets. This would undoubtedly have an impact on the cost of Indian imports and global granular urea prices.
While eventual freedom from sanctions will impact the urea market, it would have an even greater impact on ammonia as exports have been cut in half since 2010 (to just 0.5m. tonnes) with major buyers in Asia, South Korea, Taiwan and so forth not prepared to breach sanctions.
Profercy has previously published analysis on the impact of relaxed sanctions against Iran. The analysis was available to subscribers of the Profercy Nitrogen Service on 25 November. If you are interested in signing up for a free trial and would like the analysis included, please sign up here, and mention your interest in the analysis.
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