Iran storing millions of barrels of oil at sea

Jun 17, 2015 12:00 AM

Iran is said to be storing up to 45-million barrels of oil on supertankers in anticipation of a nuclear deal being reached with the United States and EU allies, according to certain reports.

The oil is mainly being stored aboard tankers belonging to its national carrier NITC and are anchored off Iran’s major ports, such as Bandar Abbas.

In the last three months, as many as 15 VLCC oil tankers have been put at anchor in Iranian waters, according to AIS vessel tracking data. Each of the vessels is capable of carrying at least 2-million barrels of oil.

The tanker broker EA Gibson says that the oil currently stored at sea off Iran represents a major increase from the 28-million barrels in floating storage at this time last year.

The stats are conflicted, however, as Broker Poten & Partners estimates 17 VLCC tankers are being used to store Iranian oil, while other reports have suggested more than 45-million barrels is being stored at sea aboard 23 tankers including a few vessels that were not part of NITC's fleet.

Oil and gas analysts say that Iran is storing the oil at sea for quick access to international markets if sanctions are eased or dropped altogether. The planned flooding of the market will likely see the fragile oil price drop further, which some say is Iran’s ultimate intent.

"The first thing they will try and do is offload quite a lot of that storage,” says Mehdi Varzi, a former official at the state-run National Iranian Oil Company. “Oil Minister Bijan Zanganeh has already warned OPEC: make room for us. In other words, we are going to sell this oil at any price.”

"Floating storage is there to be put onto the market as soon as possible after some sort of agreement," said Varzi.

"It actually makes sense for them to go in fairly hard in order to reclaim market share and hope that high cost producers above them are inched out quicker," adds Samuel Ciszuk, senior adviser on security of supply to the Swedish Energy Agency.

Iran was OPEC’s second-largest producer after Saudi Arabia before international sanctions were imposed over its alleged nuclear weapons program. The country is now seeking to clear space for its gradual return to the market.

Iran currently exports around half as much oil as it would like, around 1-million barrels per day.

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