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Iran, Oman help support gasoline

Iran heard importing gasoline, no official confirmation.

September 22, 2010 3:02 by

Gasoline premiums in the Middle East held their ground over the last week, drawing support from Omani buying and speculation Iran had managed to import fuel in defiance of international sanctions.

Trade sources said 12,000 tonnes of gasoline had made its way to Bandar Abbas in Iran earlier this month.

But there was no official confirmation of the deal and some traders said Iran was still absent from the market.

“I suspect things are slightly better for now,” one trader said of the market. “But this could be very short-lived.”

One trader pegged gasoline at around Middle East benchmark naphtha quotes plus $30-40, broadly unchanged from last week, but another said they had risen to plus $60-$65.

Since sanctions on Iran designed to curb its nuclear ambitions, it has become far harder for Tehran — which says it is aiming only to generate power and denies any intent to produce weapons — to deal in fuel.

Its gasoline imports, which used to stand at 10-12 cargoes a month, have dropped to almost none, trade sources have said.

Iran has said it has achieved gasoline self-sufficiency, but analysts and traders say the world’s fifth largest oil exporter still needs some imports because of limited refining capacity.

Apart from the reported Iranian buying, trade sources said Oman was looking to buy 20,000-25,000 tonnes of gasoline in a tender.

One trader also said the UAE gasoline distribution company Emarat had also asked for “a few extra cargoes”.


Gas oil premiums were largely unchanged over the last week.

Oversupply and the absence of buying from flood-stricken Pakistan weighed on the market, while arbitrage opportunities across regions underpinned it.

“There’s not much support in terms of supply and demand,” one trader said. “But the East/West spread is a bit wider so that’s why there’s some improvment on gas oil,” he said.

Refinery outages and run cuts in the West, as well as stocking ahead of winter heating needs, have buoyed European demand, prising open the arbitrage window nearly two weeks ago.

At least seven vessels have been fixed to carry 660,000 tonnes, or about 5 million barrels, of gas oil from Northeast Asia to Britain in arbitrage journeys, loading between mid-September and early October.

Regional premiums for 0.2 percent gas oil were pegged at around $0.50-70 a barrel and 0.5 percent at $0.40-50 a barrel.

That compares with last week’s $0.40-70 a barrel for 0.2 percent gas oil and $0.30-50 a barrel for 0.5 percent.

Within the region, demand for gas oil was limited, traders said.

“For Saudi Aramco, I don’t think they have a big appetite to receive extra oil from suppliers. They’re getting 4-5 cargoes a month into the Red Sea and I don’t think we’ll see what they did in June when they used to get 7-8 cargoes,” one dealer said.


Lack of demand was expected to maintain pressure on the naphtha market, which dropped into single digits.

One dealer said he expected the market to stay weak until mid-November.

“Buyers are not paying, they want huge discounts,” he said.

Saudi Aramco sold 55,000 tonnes of naphtha for mid-October loading from Rabigh/Jeddah at $4.00-$5.00 a tonne above Middle East quotes on a free-on-board (FOB) basis, sharply down from a recent sale for a September cargo.

The state-owned refiner in late August sold 55,000 tonnes for Sept. 21-24 loading from the same ports to Glencore at premiums of around $17.00 a tonne FOB.


“The market’s still bearish and there are a lot of unknowns,” the trader said. “Iran should start by next month to export less but then you have a lot of cargoes coming out and less demand from Aramco and less demand from India.”

As demand faltered, supplies were ample.

India’s Mangalore Refinery & Petrochemicals Ltd (MRPL) issued its monthly tender offering 80,000 tonnes of fuel oil for early November-loading, against a market in which the previous tender was awarded at a lower level.

Under the tender issued this week, a 380-centistoke (cst) parcel for Nov. 3-5 lifting from New Mangalore was offered on an FOB basis. The tender closes on Sept. 29 and will remain valid for a day.

Fujairah bunker prices for 180 cst ranged from $3 to $5 a tonne above Middle East spot quotes, unchanged from last week.

Volumes from Saudi Arabia rose, with 500,000-550,000 tonnes sold for September, up from 300,000-350,000 tonnes for each month of July and August, as the kingdom emerged from its peak summer demand season.

Saudi Aramco’s offer of an October-loading A961 cargo received muted interest, drawing bids lower than its two previous deals that were transacted at two-year-low levels, at discounts deeper than $4.00 a tonne to Singapore spot quotes.

(Additional reporting by Reem Shamseddine; Editing by Barbara Lewis)

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