Tehran storing 35 million barrels of crude oil on
18 tankers at sea Iran struggling to find buyers for some heavier crudes
LONDON, April 30, (RTRS): Iran, the world’s fifth-largest oil exporter,
is storing 35 million barrels of crude oil at sea on 18 tankers as it
struggles to find buyers for some of its heavier crudes, broker E.A.
Gibson said on Friday.
Oil exports are the country’s key revenue earner and trade sources have
said Iran is looking to store increasing amounts of crude at sea as
stocks build up.
Gibson said Iran was estimated to be using 17 very large crude carriers
(VLCCs) and one suezmax to store the oil in the Middle East Gulf area,
which “equates to a staggering 35 million barrels of oil, or around 10
days of total national production”.
Gibson told Reuters in February Iran was storing crude oil on four VLCCs.
A VLCC can store up to 2 million barrels of crude while a suezmax can
hold up to 1 million barrels.
“Iran has been struggling to find buyers for certain of their heavier
crudes, which have been facing increasing competition at the same time
that its Asian refinery customers are engaging in seasonal refinery
maintenance,” Gibson said in a report.
Iran is OPEC’s second-largest oil producer and some of its major
customers have said they will cut their imports.
“Unwilling to greatly slow production, and without onshore storage for
the oil produced at its offshore Soroush and Nowruz oilfields, Iran has
used more and more of their own fleet to store ‘surplus’ supplies,”
Gibson said.
“How long the Iranian storage will go on is unclear, history would
indicate that it will be drawn down during the third quarter as refinery
capacity will have come back onstream and oil demand rises.”
Pressure
This development coincides with seasonally lower crude demand because of
refinery maintenance, while pressure from the West on Iran intensifies
over its nuclear programme.
Gibson’s estimate is in line with shipping sources who have told Reuters
Iran is using 17 to 20 tankers to store crude.
The rise in storage by Iran has pushed the total volume of crude oil
held on tankers globally higher.
“Crude storage was stable at around 55-65 million barrels between July
2009 and early March 2010. Moreover, March and April have seen large
gains with 81 million barrels now being stored,” Gibson said.
Brokers said a market price structure known as contango, where prompt
oil is cheaper than forward prices, was beginning to make it more
attractive to store crude on tankers, encouraging speculative trading
plays.
“Part of the drive for floating storage is attributable to oil traders
taking advantage of the reappearance of a contango in over the past few
weeks,” Morgan Stanley said in a report.
Broker ICAP Shipping said on Friday the volume of crude oil held on
tankers at sea globally had risen to 31 million barrels from an
estimated 27 million barrels a week ago.
“Storage continues to play a crucial role in the health of both the
clean and crude tanker markets,” Gibson said.
Gibson said clean oil products, mostly gasoil, held in floating storage
had fallen more than 60 percent to 40 million barrels from close to 100
million barrels at a peak last year.
“Recent storage fixtures to absorb surplus jet fuel, resulting from the
flights grounded by Icelandic volcanic ash, have done little to stem
this decline,” Gibson said.
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