Iranian tankers stranded by threat of US sanctions

A tanker prepares to dock at the Iranian oil facility on Kharg Island, in the Gulf. (AFP)
Updated 13 September 2018
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Iranian tankers stranded by threat of US sanctions

  • Two Iranian oil tankers floating off the UAE for a month as US sanctions take effect
  • The build-up in Iranian oil supplies underscores the pressure that Iran is facing as Washington aims to bring Iranian oil exports down to zero

DUBAI: Two tankers carrying Iranian condensate, a type of ultra-light oil, have been floating off the UAE for about a month as demand for the oil fell ahead of US sanctions.
The tankers, carrying about 2.4 million barrels of South Pars condensate combined, were stranded after South Korea halted imports from Iran and China’s demand fell during summer, according to industry sources and shipping data.
The build-up in Iranian oil supplies underscores the pressure that Iran is facing as Washington aims to bring Iranian oil exports down to zero to force Tehran to re-negotiate a nuclear deal.
The Very Large Crude Carrier (VLCC) Felicity loaded condensate at Iran’s Assaluyeh port in early August and then set sail for Jebel Ali in the UAE, shipping and trade flows data on Thomson Reuters Eikon showed.
It arrived at the ship-to-ship transfer area off Dubai on Aug. 7 and has been anchored there since. Similarly, the Suezmax tanker Salina also loaded oil at Assaluyeh and has been circling in the same area off Dubai since Aug. 17, according to the data.
Oil processors in South Korea, Iran’s top customer for South Pars condensate, halted Iranian oil liftings in July as banks, insurance and shipping companies wound down business related to Iran before US sanctions on the country’s petroleum sector kick in on Nov. 4. China typically cuts South Pars condensate imports in the summer because of its foul smell, the sources said.
The condensate contains high levels of a sulfurous compound known as mercaptans that require additional processing by refiners to remove. “Taking a cargo to China now when China may not want it means it may lose a cargo to India,” a US-based trader said. “So the cargoes will stay in place until they need to leave on agreed delivery period.”
Emirates National Oil Company (ENOC), another buyer of Iranian condensate, has been asked by the UAE government replace Iranian supply with imports from other countries, one of the sources said.
The National Iranian Oil Co. and ENOC did not respond to requests for comment. The number of ships loaded with Iranian oil and anchored off the loading port of Kharg Island and the Souroush oil field has also risen.
Three supertankers capable of carrying 2 million barrels, the Happiness I, MT Hedy and Humanity, have floated for 10 days or more while another four have been there for less than a week. Iran’s August crude and condensate exports fell to 67.7 million barrels, the lowest since April 2017, according to data from Thomson Reuters Oil Research and Forecast.


OPEC chief: Group must stay together as US sanctions Iran

Updated 25 min 35 sec ago
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OPEC chief: Group must stay together as US sanctions Iran

  • Production cut agreement now a "permanent feature"
  • Brent already near $80 per barrel

FUJAIRAH: OPEC must stick together for the good of the global economy as founding member Iran faces renewed US sanctions, the head of the group said Tuesday — though he did not address how an already-tight market will make up for the loss of Iranian supply.
Mohammed Sanusi Barkindo also said an agreement between OPEC and non-members that cut production and helped bring prices back up from lows of $30 a barrel in January 2016 was now “a permanent feature.”
Cementing that arrangement would be one of the topics of discussion as OPEC meets this Sunday in Algeria, he added.
Still, OPEC will face rising anger from Iran, which feels increasingly under pressure after President Donald Trump pulled out of the landmark nuclear deal between Iran and world powers in May.
Crushing US oil sanctions on Iran will resume in early November and already, American allies in Asia are cutting back on their purchases of Iranian crude.
The US moves have gotten furious reactions from Iran, especially amid talk of American officials asking Russia and Saudi Arabia to make up the difference.
“Mr. Trump’s attempt to prevent Iran from appearing on the global crude oil markets has allowed Russia and Saudi Arabia, which would not favor low prices, to pursue hostage-taking policies in the market,” Iranian OPEC governor Hossein Kazempour Ardebili said on Saturday.
Barkindo said: “Iran is not only a founding member of OPEC, it’s a very important member of this organization. We have no choice but continue to work with all parties.”
Benchmark Brent crude already is nearing $80 a barrel and analysts believe it may go even higher as production remains low. A loss of Iranian supply likely will further drive up prices.
Trump, facing midterm elections in the US, already has called for more oil production from Saudi Arabia and OPEC to bring down prices with limited effect. A gallon of regular gasoline costs on average $2.85 in the US, up from $2.62 a year ago, according to AAA.
Barkindo praised the agreement between OPEC and non-members that cut production and said the cartel would work to make it permanent.
“The declaration of cooperation has come to stay,” he said.