Reuters: Sanctions on Iran’s fuel imports are forcing the Islamic Republic to pay well above the market rate for its gasoline, figures from the Turkish government seen by Reuters showed on Thursday.
By David Sheppard and Humeyra Pamuk
LONDON, Aug 5 (Reuters) – Sanctions on Iran’s fuel imports are forcing the Islamic Republic to pay well above the market rate for its gasoline, figures from the Turkish government seen by Reuters showed on Thursday.
The data from TUIK, the Turkish statistical institute, showed Iran was forced to pay a premium of around 25 percent for its imports even before U.S.-led sanctions took full effect, as the Islamic Republic turned to a dwindling number of suppliers.
“With the number of suppliers dwindling its a natural reaction for prices to get forced up, but this is a real worry for the Iranian government that is already battling high inflation,” Middle East analyst Meir Javendafar at Meepas said. “The Turks are saying we can be your friend in the region, but only for a price.”
Wide ranging U.S. and European Union sanctions that came into force in July are designed to squeeze Iran’s fuel imports and increase its international isolation over its nuclear programme.
The West suspects Iran of attempting to build nuclear weapons, but Tehran says its development of nuclear technology is for peaceful purposes.
Iran is the second-largest crude oil producer in the Organization of the Petroleum Exporting Countries (OPEC) but relies on imports for up to 40 percent of its gasoline needs because it lacks refining capacity.
The TUIK numbers showed Turkey stepped in to export the equivalent of 1.2 million barrels (138,673 tonnes) of gasoline to Iran in June — four times the volume previously indicated — when most other sellers refused to continue sales.
The volume is the equivalent of roughly 10 percent of Iran’s monthly gasoline consumption, according to figures from the Iranian oil ministry.
The first reported shipment in June from Turkish refiner Tupras came after a hiatus of 18-months, trade sources said. It was arranged just days after Turkey and Brazil brokered a nuclear fuel swap plan with Tehran, aiming to quell fears over Iran’s atomic ambitions.
Turkey received $121.8 million from Iran for the sales in June, which amounted to an average of $878 a tonne, compared with an average price in the Mediterranean in June of around $700 a tonne, according to Reuters data.
“(The premium is) a ridiculous level but not unexpected,” one European gasoline trader said. “When every oil major and trader is being pressured to drop supply, it comes down to the Turks and Chinese.”
TURKEY AND CHINA
In July, only three cargoes of gasoline reached Iran from all suppliers, according to a shipping document seen by Reuters, though some traders said Iran needed less than the seasonal norm after stockpiling ahead of the U.S. sanctions.
Iran’s oil minister Massoud Mirkazemi was in Beijing on Thursday seeking to shore up ties with one if its biggest energy trading partners. Unipec, the trading arm of China’s Sinopec, sent one cargo of gasoline to Iran in July.
China pushed back at U.S. pressure on its business and oil trade with Iran in comments published on Wednesday.
“China’s trade with Iran is a normal business exchange, which will not harm the interests of other countries and the international community,” Chinese Foreign Ministry spokeswoman Jiang Yu said in comments published in the official China Daily.
Pressure on Iran was compounded last month when insurance market Lloyd’s of London said it would not insure or reinsure petroleum shipments going into Iran.
An owner of a gasoline tanker refused to allow the vessel to sail to Iran from Turkey later in July, according to trade and shipping sources.
(Additonal reporting by Emma Farge; editing by William Hardy)
