By Emma Farge and Humeyra Pamuk and Alex Lawler
GENEVA/DUBAI (Reuters) - Iran's crude oil exports in December leapt to their highest level since European Union sanctions took effect last July, analysts and shipping sources said, as strong Chinese demand and tanker fleet expansion helped the OPEC member dodge sanctions.
Exports rose to around 1.4 million barrels per day (bpd) in December, according to two industry sources and shipping and customs data compiled by Reuters on a country-by-country basis and corroborated by other sources and consultants.
The sources said they expected exports to dip in January from the December peak ahead of new U.S. sanctions.
Western sanctions aimed at curbing Iran's disputed nuclear program halved Iran's oil exports in 2012 from 2.2 million bpd in late 2011, leading to billions of dollars in lost revenue and a plunge in the Iranian currency.
But continuous robust demand from top buyer China and others such as India and Japan, as well as the purchase of new tankers, allowed the Islamic Republic to unexpectedly boost exports late last year.
The United States and the EU are hoping the economic pressure will force Iran to address international concerns about its nuclear program, which Tehran insists is for peaceful purposes but the West suspects is for making weapons.
Salar Moradi, oil market analyst at oil and gas consultancy FGE, estimated that Iran shipped more than 1.4 million bpd of crude oil in December and forecast that exports would remain between 1.1 million and 1.3 million bpd in the first quarter of 2013.
This represents an increase from a low point of less than 900,000 bpd in September and suggests monthly revenues worth approximately $4.7 billion based on December Brent prices.
"They (Iran) bought a number of tankers from China and can now do more deliveries ... It's taken some pressure off Iran and facilitated tanker traffic and we are seeing higher exports to China," he told Reuters this week.
The second industry source said the rise in exports to near 1.4 million bpd was a result of traditional buyers finding new ways to secure shipping insurance.
But, like FGE, he estimated that they would fall slightly to around 1.3 million bpd in January.
Chinese data showed the country bought 593,400 bpd of Iranian crude in December, the second-highest level of daily imports in 2012, a rise that Chinese officials also attributed to an easing of shipping delays.
Previously, Iran's tanker fleet had struggled to meet delivery schedules to China because EU measures in July barred Europe-based insurers from covering tankers that carry Iranian oil.
"China is saying let's up the numbers because no one is doing anything about it, and it looks like Obama has made a political decision not to go to war with Iran," said a senior source with a large independent trading house, referring to U.S. President Barack Obama.
Elena McGovern, oil and gas analyst at Business Monitor International, said: "The implications of preventing Chinese imports from Iran would be too damaging to the (U.S.-China) bilateral relationship. I would be very surprised if Obama were to take China to task on Iranian imports."
India's imports of Iranian crude were up 29 percent in December from November at around 275,000 bpd, according to tanker arrival data.
Tracking Iranian shipments has become increasingly difficult as companies have sought to conceal tanker movements from Western governments by turning off satellite signals.
Estimates of the Islamic Republic's monthly crude exports can vary considerably and are frequently revised.
NEW SANCTIONS LOOMING
A fresh round of U.S. sanctions coming into force next month could cap Iran's exports in the coming months as some buyers balk at the prospect of falling foul of the measures.
From February 6, U.S. law will prevent Iran from repatriating earnings it gets from its shrinking oil export trade, a powerful sanction that the U.S. officials say will "lock up" a substantial amount of Tehran's funds.
"We continue to engage in close consultations with our international partners on U.S. sanctions with the objective of maintaining pressure on Iran to comply with its international obligations," said U.S. State Department spokesman John Finn.
"Month-to-month variability in crude oil purchases is not unusual," he added.
The International Energy Agency in December forecast a drop in Iranian exports to around 1 million barrels per day in late 2012 and early 2013.
But no matter how many rounds of sanctions are in effect, they are never watertight. Iran found creative ways to market its products and managed to sell more than 1.3 million tonnes of its fuel oil last summer, generating revenues equal to up to a third of its crude exports.
However, the latest data showed fuel oil exports have also taken a dip from the average 648,000 tonnes from July to October.
Exports fell to approximately 230,000 to 330,000 tonnes in December, Salar Moradi said, although he attributed this partly to higher domestic consumption in winter as utilities switch to fuel oil to replace gas used to meet heating requirements in the country.
In a more conservative estimate, data from a firm tracking Iranian fuel oil shipments showed that December exports were around 150,000 tonnes.
Condensate exports also fell by around 300,000 tonnes from November to 600,000 to 700,000 tonnes in December, data from the same firm showed. A Dubai-based analyst said condensate exports might come under further pressure as Iran's biggest customer in the Middle East has decided to reduce its purchases.
Dubai government-owned Emirates National Oil Co (ENOC) has started importing condensate from Qatar to replace sanctioned Iranian oil and is close to finalizing deals with other producers, the company said on Sunday.
Still, some analysts think Iran will continue to find ways to safeguard against significant drops in its oil revenues.
"What we have seen is that when Iran is pushed to a do-or-die situation, they have looked for creative solutions to get around sanctions," said McGovern.
"The system will always find a way to cope."
(Reporting by Emma Farge, Humeyra Pamuk in Dubai; additional reporting by Alex Lawler in London and Manash Goswami in Singapore; Additional reporting by Arshad Mohammed in Washington; Editing by Giles Elgood and Lisa Shumaker)
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