Reuters: Only three cargoes of gasoline have so far reached Iran in July, according to a shipping document seen by Reuters, much less than the seasonal norm, as new sanctions cause ships carrying fuel to be diverted.
By Amena Bakr and Luke Pachymuthu
DUBAI/SINGAPORE, July 26 (Reuters) – Only three cargoes of gasoline have so far reached Iran in July, according to a shipping document seen by Reuters, much less than the seasonal norm, as new sanctions cause ships carrying fuel to be diverted.
A series of new sanctions agreed since June specifically targets Iran’s oil trade and industry, making it even harder to do business with the Islamic Republic.
It is the world’s fifth largest crude exporter, but has to import around 40 percent of its gasoline needs because domestic refining capacity is inadequate.
Traditionally during the summer holiday driving season, Iran needs 11-13 cargoes a month, a Dubai-based trader told Reuters.
The document seen by Reuters showed only three cargoes of gasoline had arrived this month and were supplied by Turkish refiner Tupras and Unipec, the trading arm of China’s Sinpoec.
Another cargo is expected to arrive from Venezuela at the Iranian port of Bandar Abbas, two Gulf-based traders said.
“The new rounds of sanctions are making things hard right now, and many ships are being diverted so Iran is only getting a fraction of its actual summer demand,” said a trader.
Earlier this month the owner of a gasoline tanker refused to allow the vessel to sail to Iran from Turkey.
“Owners of ships are really worried right now about sending shipments to Iran and that’s why Iran is looking for alternative companies and countries to import from,” said a Gulf-based trader.
As the pressure has mounted on Iran, insurance market Lloyd’s of London said it would not insure or reinsure petroleum shipments going into Iran.
Lloyd’s, which has 15 to 20 percent of the global marine insurance sector, is seen as a major influence on other insurance markets with more players pulling back from offering cover to Iran.
Major shipping associations have also created clauses in contracts that enable ship owners to refuse to deliver refined petroleum cargoes to Iran.
ADAPTING TO CHANGE
Some of Iran’s traditional suppliers such as China and Turkey are expected to stay loyal.
Venezuela, although very distant, making shipments costly, is a clear ally.
“The Iranians are looking for countries that don’t care about the sanctions and Venezuela is one of them, despite the fact that it’s really far away,” one of the traders said.
Iran can also adapt by upgrading its refining capacity, although this requires time and investment.
Other strategies include smuggling refined products by land.
Trucks filled with fuel have managed to find a way to cross the border into Iran despite a pledge by Iraqi Kurdistan to crack down on the smuggling activities.
Asked about gasoline imports, an official from the National Iranian Oil Co. said there was “no sign of difficulties.”
He also said crude exports were continuing to China and Europe. (Additional reporting by Barbara Lewis; editing by James Jukwey)