Iran Oil Flow May Be Hit by Foreign Tanker Exodus: Julian Lee

(Bloomberg) -- The snap-back of U.S. sanctions on Iran’s oil exports may well see international shipping companies, which have carried more than half of Iran’s oil exports over the past six months, pull back from the trade, leaving the Persian Gulf country to depend much more on its own tanker fleet, writes Bloomberg oil strategist Julian Lee.

• Over the past six months 53 percent of Iran’s observed exports of crude and condensate have been carried on non-Iranian vessels, including ships owned by companies including Frontline, Dynacom, SK Shipping, Minerva Marine, Delta Tankers and Cosco Shipping, according to Bloomberg tanker tracking.
• During the previous sanctions, which ran from 2012 until early 2016, much of Iran’s own tanker fleet was tied up storing crude and condensate that the country was unable to sell. During that period, the volume of oil stored on Iranian tankers rose as high as 45 million barrels, tying up as many as 25 vessels, from an Iranian fleet of around 60 ships at the time.

• Since then, three ships have been sold, one sank in the South China Sea and six have been scrapped. Another five vessels, all Aframaxes, are predominantly used to shuttle between Iran’s Kharg Island export terminal and Bandar Abbas, the site of several refineries.
• The remaining NITC fleet consists of 37 VLCCs and eight Suezmaxes, with a combined carrying capacity of around 82 million barrels of oil.
• Under previous sanctions, owners couldn’t get cover for Iranian business, in part because reinsurance was often purchased in the U.S. market.
• The International Group of P&I Clubs, which covers more than 90 percent of the world’s tankers against risks including oil spills, said Wednesday there’s likely to be “significant ramifications” from the sanctions; it continues to monitor the situation, and in particular how other countries in the Joint Comprehensive Plan of Action respond.
  • NOTE: The International Group arranged last year for Iranian ships to be re-insured outside of the U.S.
• NOTE: Julian Lee is an oil strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.

To contact the reporter on this story: Julian Lee in London at jlee1627@bloomberg.net.

To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net, Brian Wingfield

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