17-11-2018

Iran’s tanker fleet goes off grid post-sanctions

Almost half of Iran’s state-owned oil tankers have stopped broadcasting their geographical positions over the past month, leaving an uncertain picture of the country’s seaborne crude exports after the reintroduction of US sanctions.

The move comes as Iran oil shipments have fallen by almost 730,000 b/d since May, when the US withdrew from the Iran nuclear deal.
At least 25 tankers owned by Iran’s National Iranian Tanker Company have not posted any update of their position by satellite using the Automatic Identification System (AIS) since November 10, according to S&P Global Platts trade flow software cFlow.

Rough weather has also made it difficult for loadings to take place and for tankers to consistently display satellite signals.

International Maritime Organization regulations require vessels to share their Automatic Identification System (AIS) data.

Not all of the NITC fleet appears to be hiding its location. cFlow shows at least 17 NITC tankers that have updated their locations November 15.

Iran’s state-owned National Iranian Tanker Company operates 38 VLCCs, making it the second-largest operator of such supertankers, the biggest being Saudi Arabia’s Bahri. NITC also operates around 20 tankers of the Suezmax and Aframax categories.

FLOATING BARRELS AND STS TRICKS
State-owned National Iranian Oil Company is also resorting to holding crude and condensates in some of its key crude buyers, both inland and in tankers, as a line of defense against sanctions

The OPEC member sent about 40 million barrels of crude and condensates in September and October to Dalian in northern China for leased storage.

Iran is also storing oil in VLCC tankers in Malaysian waters, while arrangements are also being made to offload crude oil into other storage tankers in the region, according to sources.

Iran is also using ship-to-ship transfer to sell its oil to non-US waiver countries by loading it at ports with STS facilities in the Persian Gulf and parts of southeast Asia.

This practice is being followed by Iranian tankers in the Fujairah region and parts of Singapore and Malaysia. It was also regularly used during the last round of Western sanctions.

Iranian crude is shipped to these regions using feeder ships and then transferred to smaller vessels that do not mention Iran as the origin.

Iran also used floating storage for its oil under the previous sanctions regime. At the height of the sanctions, Iran held some 50 million barrels of its crude and condensate in tankers.

Production has also now begun to suffer in light of the sanctions, falling to 3.29 million b/d in October, the lowest since June 2013, according to Platts data.

Representatives at both NIOC and NITC were unavailable for comment.

EXPORTS BEGIN TO FALL FURTHER
Iranian crude and condensate shipments fell in October, averaging 1.77 million b/d compared to 1.95 million b/d in September, cFlow data showed. Iran shipped 2.50 million b/d of crude and condensates in May.

Shipping and trading sources said loadings toward the end of the month fell sharply due to bad weather, which delayed loadings. Flows so far this month have also been low due to extremely rough weather.

Other Middle Eastern exporters such as Kuwait and Iraq have also observed a sharp fall in loadings due to rough weather in the region.

The US granted exemptions from its sanctions to eight key buyers: China, India, Japan, South Korea, Turkey, Taiwan, Italy and Greece.

Refiners from some of these countries that have been granted waivers said that logistical and banking uncertainties still make it difficult to purchase Iranian oil.

S&P Global Platts Analytics expects 1.7 million b/d of Iranian crude and condensate to leave the market by November, compared with April levels.
Source: Platts

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