The UAE and Saudi Arabia are set to be among the regional beneficiaries of European Union sanctions imposed on Iran after it was revealed Spain is set to increase its imports from both GCC states in order to offset a sharp decline in Iranian crude.
Spain's crude imports from Iran dropped in January, while its supplies from Nigeria and Iraq rose sharply, just as the European Union imposed sanctions on the Islamic Republic, according to official data reported by Reuters on Monday.
In its latest monthly bulletin, strategic hydrocarbons reserve board CORES estimated Spain had imported 279,000 tonnes of crude oil from Iran, a drop of 31 percent from December.
The European Union imposed sanctions on Iran on January 23 over the Islamic Republic's nuclear programme, although importers have until July 1 to complete previously signed contracts.
Spain, which needs to import virtually all of its crude, ramped up imports in January from Nigeria, Iraq and Libya. Production has been returning to normal in the latter after last year's civil war.
As trade sources expected, as Spain's crude imports from Iran continue to drop, the Spanish government said the country's two biggest oil companies, Repsol and Cepsa, had arranged to switch imports from Iran to Saudi Arabia, to Russia and, to a lesser extent, Iraq.
Cepsa, Spain's second largest refiner and which is owned by Abu Dhabi investment vehicle IPIC, said it plans to source crude from the UAE.
Repsol has the capacity to refine 890,000 barrels per day and Cepsa 430,000 bpd.