High oil prices shield Iran from sanctions High oil prices are insulating Iran from the full impact of US and European sanctions on the sale of its crude, providing Tehran with breathing space as it prepares for a new round of nuclear talks with western nations next month. The Centre for Global Energy Studies (CGES), a London-based think-tank, estimates that Iran will earn $56bn selling its crude this year - its third-highest earnings ever - even after factoring in the loss of roughly a third of its export volume due to sanctions. However, analysts point out that Tehran is finding difficulties in repatriating the funds due to the sanctions on its central bank. Hellenic Petroleum, a Greece-based refiner, recently stopped importing Iranian oil as it was unable to transfer its payments. The Iranian rial has weakened significantly against the US dollar since December - a sign that Tehran faces difficulties obtaining hard currency. Iran has proposed an oil-for-grain barter deal with India, currently its biggest oil client, because of the difficulties New Delhi faces in transferring payments from its refiners to Iran's central bank. Washington has imposed sanctions to penalise foreign financial institutions dealing with Iran's central bank, while Brussels has approved a full embargo on Iranian crude oil starting formally from July 1. The western allies are trying to achieve a difficult balance: hurt Iran enough to force it to negotiate over its nuclear programme, but keep enough oil flowing to avoid a price spike that damages the fragile economic recovery. "The sanctions are not working," said Olivier Jakob, head of the Swiss-based oil consultancy Petromatrix, in a note to clients. They are definitely hurting Iran as it limits its [crude oil] exports, but they are also hurting the rest of the world, given that the western powers have not managed to control prices. The CGES, which is widely respected in the oil industry, estimates that without the new sanctions, Iran would earn about $68bn this year - down 5.5 per cent from $72bn in 2011. But this assumes that oil prices remain as high as they are today. Most oil traders and analysts believe that energy costs would be lower if Washington and Brussels had not imposed sanctions. The sanctions - which the think-tank predicts will reduce Iran's oil exports by about 600,000 barrels a day (in line with other estimates of a drop of between 500,000 and 850,000 b/d) - would cut the revenues to $56bn. This would still be the third-highest ever, and more than Iran earned in any year before 2007. Mahmoud Ahmadi-Nejad, Iran's president, says Tehran has enough savings to survive until 2015. "They [western powers] intend to impose an embargo on our oil," he said last week. We have as much hard currency as we need, and the country will manage well, even if we don't sell a single barrel of oil for two or three years. On Tuesday, Rostam Ghasemi, Iran's oil minister, said the country had yet to suffer a decline in crude exports due to the sanctions. Washington, which measures oil export revenues differently, estimates that Tehran earned $22bn in the first quarter of this year - roughly the same amount it pocketed during the whole of 2003. Even if these revenues halve in the next three quarters of the year, the country will earn $55bn based on US government calculations - the fourth-highest ever. Additional reporting by Najmeh Bozorgmehr in Tehran