Iran Is Ready To Flood The World With Oil… It Just Has No Ships To Deliver It
By Tyler Durden
Late last week, just ahead of the Doha meeting, we showed that Iran’s existing oil tanker armada which until recently had been on anchor next to the Iranian coast and which according to Windward data was storing as much as 50 million barrels offshore…
… had finally started to move.
The reason, as Bloomberg reported, was that tankers carrying about 28.8 million barrels of crude, or more than 2 million a day, left the Persian Gulf country’s ports in the first 14 days of April. That compares with a rate of about 1.45 million barrels a day in March. As a result, Iran’s crude shipments have soared by more than 600,000 barrels a day this month, and offsetting the entire production decline by US producers with just half a month’s incremental production.
However, now that the shipping armada has sailed to its various (most Asian) destinations, it may be difficult to repeat this in the near term.
According to Reuters, Iran is struggling to increase oil exports because many of its tankers are tied up storing crude, some are not seaworthy, and foreign shipowners are clearly reluctant to carry its cargoes.
The math: Iran has 55-60 oil tankers in its fleet, a senior Iranian government official told Reuters. He declined to say how many were being used to store unsold cargoes, but industry sources said 25-27 tankers were parked in sea lanes close to terminals including Assaluyeh and Kharg Island for this purpose.
Asked how many tankers were not seaworthy and needed to go to dry docks for refits to meet international shipping standards, the senior official said: “Around 20 large tankers … need to be modernised.” A further 11 Iranian tankers from the fleet were carrying oil to Asian buyers on Tuesday, according to Reuters shipping data and a source who tracks tanker movements. That was broadly in line with the number consistently committed to Asian runs since sanctions were lifted in January, putting more strain on the remaining available fleet.
So as increasingly more of Iran’s tanker fleet is currently utilized or is otherwise out of commission, Iran desperately needs foreign ships to execute its plans for a big export push to Europe and elsewhere and meet its target of reaching pre-sanctions sales levels this year.
There is just one problem: nobody wants to give their spare tanker capacity to Iran.
According to Reuters ship owners, who are not short of business in a booming tanker market, are unwilling to take Iranian cargoes.
One stumbling block is residual U.S. restrictions on Tehran which are still in place and prohibit any trade in dollars or the involvement of U.S. firms including banks – a major hurdle for the oil and tanker trades, which are priced in dollars.
As a result only eight foreign tankers, carrying a total of around 8 million barrels of oil, have shipped Iranian crude to European destinations since sanctions were lifted in January, according to data from the tanker-tracking source and ship brokers. …read more
Source: Iran Is Ready To Flood The World With Oil… It Just Has No Ships To Deliver It
