Asian buyers cut their purchases of Iranian crude by 15 percent in 2013 and shipments to Tehran's biggest oil customers are expected to recover only slightly this year, even after a deal with the West eases some sanctions.
China, India, Japan and South Korea together cut imports from Iran to an average of 935,862 barrels per day (bpd) in 2013, government and industry data showed. That would mean a revenue loss of $46 billion for Tehran, based on pre-sanction crude exports of about 2.2 million bpd.
An agreement between Iran and six world powers in November allows the OPEC member to keep exports at the current reduced levels of about 1 million bpd, and opens a door for lifting shipments later.
Any increased oil production from Iran would weigh on oil prices after other OPEC producers such as Saudi Arabia raised exports to fill the gap created by the Western sanctions, as well as by outages in North Africa and the Middle East.
But there are doubts over how soon Iran could return its exports to pre-2012 levels, especially with Asian buyers reluctant to agree to large increases in import volumes until a final diplomatic agreement is reached.
"We don't see any real reason for the negotiations to result in a substantial settlement," Fereidun Fesharaki, chairman of FACTS Global Energy, said on Wednesday in Tokyo.
"We think this could go on for several years and no substantial amount of Iranian oil will come to the market," said Fesharaki, who estimates Iranian oil production could go up 200,000-300,000 bpd under the current agreement.
Last week, the United States and the European Union began following through on promised sanctions relief for Iran covering oil exports, trade in precious metals and automotive services as part of a nuclear agreement signed in November that began taking effect on Jan. 20.
As part of that deal, Iran is due to receive on Feb. 1 its first $550 million instalment of a total $4.2 billion in oil funds to be released if its sticks to the agreement to curb its nuclear programme.
CHINA MAKES SMALLEST CUT
Toughened sanctions were placed on Iran in 2012 over its disputed nuclear programme, causing its exports to more than halve to just over one million bpd and costing it billions of dollars a month in lost oil revenue. The West say Iran's nuclear ambitions are aimed at making a weapon but Tehran says it only wants to fuel nuclear power generation.
Iran's biggest oil customer, China, reduced imports by 2.2 percent to 428,840 bpd in 2013, the thinnest cut among the top four buyers. Without the November deal between Tehran and Western powers, the small size of the reductions made by China could have exacerbated tensions between Washington and Beijing.
The deepest reductions in Iranian oil imports were made by India, which slashed the volume of crude it shipped in by 38 percent to 195,600 bpd.
South Korea cut purchases by 14.3 percent last year to 134,008 bpd. Japan, the last of the four major Asian buyers to release data, reduced imports by 6.4 percent to 177,414 bpd, marking its lowest daily crude imports from Iran since 1981.
Sources who track tanker movements have said Iran's oil exports picked up modestly in January for the third consecutive month, but data available so far hasn't shown any increase in shipments arriving in Asian ports.
Until a final agreement is reached, most of the Middle Eastern nation's Asian buyers are unlikely to make large increases in their import volumes. Only China has made any move to increase its imports since the November deal, with a state trader trying to negotiate a new light crude contract for 2014.
The opening round of talks between Iran and six world powers on a long-term deal for Tehran to curb parts of its nuclear programme in exchange for a gradual end to sanctions is expected to take place next month in New York, a U.S. official said earlier this week.