Oh Kippers, you are NOT going to believe thisApril 26, 2015 4:51
Iran sanctions bite
Oil shortage looms.
July 26, 2010 5:01 by Reuters
Only three cargoes of gasoline have so far reached Iran in July, according to a shipping document seen by Reuters, much less than the seasonal norm, as new sanctions cause ships carrying fuel to be diverted.
A series of new sanctions agreed since June specifically targets Iran’s oil trade and industry, making it even harder to do business with the Islamic Republic. The EU adopted formally its latest measures on Monday.
Iran is the world’s fifth largest crude exporter, but has to import around 40 percent of its gasoline needs because domestic refining capacity is inadequate.
Traditionally during the summer holiday driving season, Iran needs 11-13 cargoes a month, a Dubai-based trader told Reuters.
The document seen by Reuters showed only three cargoes of gasoline had arrived this month and were supplied by Turkish refiner Tupras and Unipec, the trading arm of China’s Sinopec.
The companies were not immediately available to comment.
Another cargo is expected to arrive from Venezuela at the Iranian port of Bandar Abbas, two Gulf-based traders said.
They were not aware any other cargoes were heading to Iran.
“The new rounds of sanctions are making things hard right now, and many ships are being diverted, so Iran is only getting a fraction of its actual summer demand,” said a trader.
Earlier this month the owner of a gasoline tanker refused to allow the vessel to sail to Iran from Turkey.
“Owners of ships are really worried right now about sending shipments to Iran and that’s why Iran is looking for alternative companies and countries to import from,” said a Gulf-based trader.
As the pressure has mounted on Iran, the insurance market Lloyd’s of London said it would not insure or reinsure petroleum shipments going into Iran.
Lloyd’s, which has 15 to 20 percent of the global marine insurance sector, is seen as a major influence on other insurance markets with more players pulling back from offering cover to Iran.
Major shipping associations have also created clauses in contracts that enable ship owners to refuse to deliver refined petroleum cargoes to Iran.
ADAPTING TO CHANGE
Industry sources and analysts have anticipated some of Iran’s traditional suppliers, such as China and Turkey, would stay loyal.
Venezuela, although very distant, making shipments costly, is also regarded as natural ally.
Iran can also adapt by upgrading its refining capacity, although this requires time and investment. For the shorter term, Iran can reduce the quotas of gasoline available at fully subsidised prices to curb demand.
The Iranian oil ministry has already said demand is on a falling trend. In June, it said average consumption since March had been 63.1 million litres, down 2.7 percent year-on-year.
Its website also said total daily production was 45 million litres, meaning about 18 million litres needed to be imported each day.
Standard gasoline cargoes are 33,000 tonnes or around 45 million litres, traders said, so one would provide around 2-1/2 days of import needs.
Other strategies for plugging the gap include smuggling refined products by land.
Trucks filled with fuel have managed to find a way into Iran despite a pledge by Iraqi Kurdistan to crack down on smuggling activities.
Asked about gasoline imports, an official from the National Iranian Oil Co. said on Monday there was “no sign of difficulties”.
He also said crude exports were continuing to China and Europe.
(By Amena Bakr and Luke Pachymuthu)