Iran struggles to find enough ships for its oil exports

Posted by PortVision

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With the lifting of 2011 and 2012 EU sanctions, Iran is eager to regain its markets for oil exports around the world, but it is struggling to find enough ships to ramp up those exports.

A recent Reuters article explains that many of its existing tankers are in use storing crude oil (approximately 25 of its fleet of 60), stockpiled due to the sanctions. As well, approximately 20 of its fleet of vessels are no longer seaworthy.

While the sanctions were in place, Iran shipped mainly to Asian markets including China, South Korea, India and Japan. According to tracking data, eleven of Iran's tankers were involved in shipments to that part of the world as recently as last week.

Foreign shipowners are reluctant to begin to work with Iran again and that has put Iran in a bind to find ships to restart exports. It appears that international firms with tanker inventories are involved with other business and do not want to change that in the near term. The global oil oversupply is also holding companies back from needing to trade with Iran. As well, Saudi Arabia has banned Iranian-flagged vessels carrying Iranian crude from entering its waters.

As far as US ships are concerned, some restrictions on business with Iran remain in place prohibiting any trade in dollars or involving firms or banks. Oil and tanker trade is priced in dollars and thus, this is a large hurdle for Tehran.

Since the sanctions have been lifted, eight foreign tankers have carried about 8 million barrels of Iranian oil to European destinations. At the end of April, Iran shipped 1 million barrels to Italy aboard the Poetic. Greek refiner motor Oil Hellas will also receive its first delivery of Iranian crude aboard the Kriti Breeze. Pre-sanctions, European buyers purchased about 800,000 barrels per day, one-third of Iran's exports. Iran expects to increase its oil exports as well as selling the crude stored during the embargo. CNN Money estimates Iran's oil production costs at $13 a barrel, a number that will allow it to compete in the world market.

In addition to the lack of foreign tankers available to Iran, Market Realist indicates that the country cannot get access to storage tanks in Egypt's port of Sidi Kerir, formerly Iran's main terminal for Western country trade.

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Posted on Jun 15, 2016, 6:07:00 AM

Topics: News, Tankers, Oilstorage, CrudeOil, oil