Western sanctions against Iran’s oil exports have shown that they have fallen by an estimated 40 per cent since the start of the year, according to the International Energy Agency. Separately, the UAE is nearing completion of an oil route that totally avoids Iran. Unlucky, Iran.

The International Energy Agency (IEA), which represents the interests of major oil consuming nations, made the announcement today in its monthly statement.

It said preliminary indications suggested exports – the lifeblood of Iran’s economy – fell to 1,5 million barrels per day in April-May, way down on the 2,5 million that were being exported at the end of 2011.

The IEA said:

In [the] months ahead, Iran may need to shut in production volumes if export markets remain similarly constrained and storage fills up.

It did however warn that though the world was better supplied with oil now than in recent years, we should be warned against complacency and against calling it an over-supplied market:

Nobody knows exactly how oil supplies will develop this summer. Memories are indeed short: crude prices remain very high in historical terms, and are acting as a drag on household and government budgets in OECD and emerging markets alike.

It said it also believed Iran was still producing 3,3 million barrels per day, down from 3,5 million last year.

Iran was probably stockpiling unsold oil.

CNBC has more:

Tehran has denied it is experiencing problems with oil sales despite mounting evidence its major customers, including China, are turning down offers of cheap crude under pressure from Washington to cut trade ties.

On Monday the US government, which aims to choke off Tehran’s oil revenue and force a halt to nuclear development it believes is aimed at making weapons, said India, South Korea, Japan and Turkey have made significant cuts to oil imports from Iran.

Iran says its nuclear programme is for civilian purposes.

The European Union will impose a full embargo on Iran’s oil from July 1. The measure will also effectively cut off tanker insurance, a major problem for Asian buyers who traditionally account for the bulk of Iran’s oil sales.

The IEA report came out days ahead of nuclear talks in Moscow between Iran and world powers – the United States, Britain, France, Germany, Russia and China.

The Organisation of the Petroleum Exporting Countries, of which Iran is a member, will meet in Vienna this week to discuss production running at a multi-year highs. US ally Saudi Arabia has been stepping up supply to replace lost Iranian barrels.

Earlier this year, oil prices rallied to $128 a barrel, their highest since 2008, on fears of a loss of Iranian production. But they have since fallen below $100 per barrel on signs of slowing economic growth in China, weak US data and an escalation in Europe’s debt crisis.

Fortunately, the country that feels it must speak for everybody, the US, added seven countries to the list of nations qualifying for an exemption from financial sanctions on Iranian oil imports.

We’re included, and so are India, South Korea, Turkey, Malaysia, Sri Lanka and Taiwan.

What’s interesting though, is this:

The United Arab Emirates is nearing completion of a pipeline through the mountainous sheikdom that will allow it to reroute the bulk of its oil exports around the Strait of Hormuz at the mouth of the Gulf, the path for a fifth of the world’s oil supply.

Iran has repeatedly threatened to close the strategically sensitive waterway, which is patrolled by Iranian and US warships, in retaliation for ramped-up Western sanctions over Tehran’s nuclear ambitions.

Read more about that, here.

[Source: CNBC]