That is mainly because rising world demand and outages in some producers like Nigeria have added to a strain on supply. Big importers like Japan have trimmed purchases from Iran but other homes for the oil appear to have emerged.
Iran, the world’s fourth largest oil exporter, sold millions of barrels of oil it had been storing at sea because of a lack of buyers, officials said this week. The customers were mainly India and oil giant Royal Dutch Shell .
“The world needs any crude that it can get,” said Manouchehr Takin, analyst at the Center for Global Energy Studies in London. “There is growth in demand and there are problems on the supply side.”
Iran’s sales of stored crude come as oil is trading around $75 a barrel, near July’s $78.40 record high, due to real and threatened supply disruptions. Violence and pipeline leaks in Africa’s top exporter Nigeria have cut its supply by a quarter.
Some importers, such as Japan, have bought less Iranian oil as Tehran’s nuclear standoff with the West drags on. Japan is the world’s third largest oil consumer.
Japan slashed second-quarter Iranian crude imports by nearly 40 percent, or about 240,000 barrels per day, from the previous quarter to around 385,000 bpd, data showed this week.
Japan’s top refiner Nippon Oil Corp. said in March it would trim Iranian crude purchases due to geopolitical risks, the first hint Tehran’s nuclear dispute with the West may hinder its vital oil trade.
But most other importers said they had no immediate plans to cut back on minimum imports of Iranian oil. A tight market and concern about cutting ties with a major exporter will limit buyers’ options, analysts said.
“There’s not enough oil in the market that you can afford to be so picky,” said Deborah White of Societe Generale. “Also, when you drop a supplier, you leave yourselves with years of ill-will.”
THREAT OF SANCTIONS
Iran is pumping out more crude as tension grows over its nuclear program.
The U.N. Security Council on Monday demanded Iran suspend its atomic work by August 31 or face the threat of sanctions. The West suspects Iran of seeking nuclear arms, a charge it denies.
Tehran has threatened to use its oil exports as a weapon to defend itself in the row, and officials have said sanctions will harm the West more than Iran by sending prices even higher.
Crude supply from Iran, the second largest producer in the Organization of the Petroleum Exporting Countries, probably rose last month because of sales from storage, analysts say.
Iran is expected to pump 4 million bpd in July, 200,000 bpd higher than an initial estimate for June, according to Petrologistics, a consultancy which tracks oil shipments.
Iran sold 12 million barrels of crude from its Soroush and Nowrouz fields in the past two months, Mahmoud Baharvand, head of import and export co-ordination at the Iranian Offshore Oil Company, told an Iranian newspaper.
Stocks of the unwanted oil, which has a high sulphur content, had been building for months. Analysts estimated Iran was storing around 20 million barrels — a quarter of daily world oil demand — on tankers.
Iran probably offered the crude at a discount to tempt buyers, analysts said. The oil is harder to convert into transport fuels, much in demand during the summer travel season.
“It is not unreasonable to give discounts,” Takin said. “Then, someone would be more likely to buy it because there are refiners around the world who would make profits.”
