Storing 40 million Barrels of oil at Sea in Anticipation of Nuclear Agreement
“The situation is favorable for us, because in Iran and Middle East, the cost is less than $10 (per barrel). That’s why we’re not worried about the market,” Zanganeh said. (Iran Daily, 16 June)
The global market is currently facing a supply glut. Ample supplies are expected to continue in near term, outweighing geopolitical concerns about the conflicts in the region. Prices are expected to be restrained despite seasonal demand increases as Saudi Arabia and other key producers maintain high oil output to maintain their market shares. Brent crude oil price was at $63 today.
Iran is storing as much as 40 million barrels of crude oil on supertankers at sea in preparation of a nuclear deal.
“The first thing (we) will try and do is to offload quite a lot of storage… we are going to sell this oil at any price,” said Mehdi Varzi, a former official at the state-run National Iranian Oil Company. “Floating storage is there to be put onto the market as soon as possible after some sort of agreement.” (Reuters/Trade Arabia, 16 June)
Shipping sources and tanker tracking data on Reuters showed over the past three months Iran had deployed at least 15 very large crude carriers (VLCCs), each capable of two million barrels, to store oil. The approximate 38 million barrels of Iranian crude in floating storage, in addition to shore-based stocks, could quickly add supply to the market. (Reuters, 16 June)
Under the current interim nuclear agreement, JPOA, Iran exports approximately 1 million barrels a day. Oil Minister Zanganeh has said Iran would pump another 500,000 within a month of lifting of sanctions and up to 1 million bpd within six months. Most analysts believe it will take more time for increases at those levels.
File photo: Iran’s main oil export terminal at Kharq Island (Getty Images)