Iran is paying a high price for its refusal to abandon its nuclear programme with sanctions aimed at oil exports costing the country US$133 million (Dh488m) a day.
Since tough US and European Union measures came into full effect last month, Iran's crude exports halved to about 1.1 million barrels a day (bpd), Bloomberg data show.
After four rounds of UN sanctions had failed to make an impact on sales, the new round targets the payment mechanisms of the oil trade with Iran and the insurance of oil tankers carrying Iranian product.
If maintained for a year, these export levels would cost Iran about $48 billion (Dh176.3bn) in lost sales.
Reduced Iranian exports have not had a major effect on the oil markets as had been widely feared when the measures were rolled out at the beginning of the year.
Opec has cushioned the blow, led by Saudi Arabia. Saudi output has risen to more than 10 million bpd in response to the stand-off between Iran and the West, the most in three decades.
In addition, demand for crude has been reduced by the continuing economic woes in the euro zone, many members of which have remained in recession, and weaker economies in China and the US.
Iran has not backed up threats to block the Strait of Hormuz, the chokepoint passed through by a fifth of global oil exports.
Brent prices hit $128 a barrel in March in response to those threats but retreated as Saudi production increased.
Brent, the benchmark price for crude sold into Europe, traded at about $106 a barrel yesterday, below last year's average of $107.
The market could come under renewed pressure when a waiver on the sanctions programme for some of the biggest recipients of Iranian crude - including China, Japan and South Korea - expires towards the end of the year.
But increasing supplies from African producers, among others, are predicted to act as a counterweight against further reductions in Iranian exports.
"We're now in the tightest quarter of the year, the situation is going to ease in the fourth quarter," said Sam Ciszuk, an analyst at KBC Energy Economics.
The decline in oil revenues, about 10 per cent of the country's GDP, according to Bloomberg estimates, is not only a significant blow to Iran's economy, which is already suffering rising unemployment and spiralling inflation. Shutting down wells in its ageing oil fields could also lead to irreparable damage to a sector that has suffered from chronic under-investment since the late shah's exile in 1979.
The US president, Barack Obama, on July 31 widened the sanctions to include Iran's trade in petrochemicals, estimated to be worth $1bn a month.
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