Reuters: Iran's April gasoline imports will rise 9 percent versus March, countering market expectations that the Islamic Republic would buy less after filling storage tanks in recent months, industry sources said on Sunday.
Iran's April March gasoline imports up 9 pct-trade
By Luke Pachymuthu
DUBAI, March 30 (Reuters) – Iran's April gasoline imports will rise 9 percent versus March, countering market expectations that the Islamic Republic would buy less after filling storage tanks in recent months, industry sources said on Sunday.
Tehran will import around 128,000 barrels per day (bpd), up from around 118,000 bpd in March.
The rise in imports has come as a surprise to traders who were expecting Iran to cut back following heavy buying between December through February, when Iran took advantage of relatively cheap international prices to stock up, traders said.
Traders were unsure why Iran was buying more, but one said the country would want to avoid any shortages in the run up to presidential elections in June.
"They have been building inventories for a few months now, and there was some expectation that they would cut back from April," a trader said. "They are probably making absolutely sure that they are well stocked in the period leading up to the elections."
Iran has already completed the purchase of about 1.53 million barrels of gasoline for April, traders said.
Iran is the world's fourth-largest exporter of crude, but lacks enough refining capacity to meet domestic gasoline needs, forcing it to import large amounts of the motor fuel which it then sells at subsidised prices. This put a heavy burden on the country's budget when prices hit records last year.
"I see that because of the generally lower price environment, Iran will likely be able to keep their imports on the upside," a Middle East based trader said. "Even if there is some pain coming from a smaller budget because of the drop in crude prices since last July."
The March monthly average Asian gasoline price for 92-octane has risen about 10.5 percent since the start of the year to around $59.55 a barrel, but remains nearly 60 percent below its peak last July.
In 2007, Tehran introduced a rationing scheme that limited how much gasoline motorists could buy at the heavily subsidised rate of 1,000 rials (about 10 U.S. cents) a litre.
Subsidised prices have encouraged demand growth, even in the face of the rationing scheme.
"We continue to see gasoline imports of between 70,000 – 90,000 bpd, with any swing likely to be on the upside," PFC Energy said.
A senior Iranian oil industry official said on state radio earlier this month that Iran has built inventories of up to nearly 11 million barrels of gasoline.
In February, trading sources said that Iran was storing at least 2 million barrels of gasoline on a supertanker, and about 2 million barrels of gas oil on mid-sized oil tankers.
Crude prices have fallen around $100 a barrel since hitting a peak over $147 a barrel in July last year, and prices for refined products such as gasoline have fallen with crude.