Iran has diverted large volumes of shipping fuel
Iran has diverted large volumes of shipping fuel that would normally be sold through Fujairah to Singapore to avoid international sanctions, traders said yesterday.
Situated on the Gulf of Oman, Fujairah offers an ideal staging post between the Atlantic and Pacific regions where ships can drop anchor and refuel. It has grown into one of the world’s most frequented ship refuelling terminals.
“Getting product from Iran is impossible. Its been like this for more than two months,” said Nic Marinos, a broker at Agean in Fujairah.
Abolfazl Rostami, a senior trader at the National Iranian Oil Company (NIOC), said Singapore was proving a better market for Iranian exports.
“For the NIOC part is has been reduced a little bit, it has sold to Singapore because we have good customers there,” he said.
Iranian fuel oil is of a high quality with a low ratio of sulphur, and fuel retailers normally blend it with lower quality oil before selling it on to ship owners.
The drop in supply has caused prices in Fujairah to rise sharply.
“This implies higher blending costs for Fujairah,” said Barclays Capital in a report, adding that the cost of fuel sold in Fujairah rose further above prices paid in Singapore.
Iran has been hit with a fourth round of sanctions since the beginning of the year. The sanctions target the payment system for Iranian oil, and have made it difficult to insure cargos heading out of Iran. It is estimated that they have reduced crude exports by 300,000 barrel per day (bpd) so far, causing exports to drop below the 2 million bpd mark.
The sanctions have made sales of fuel oil more difficult, said Mr Rostami, but he denied that sales volumes had dropped.
“We are facing some problems for the sale of our product, but it has not stopped. Last year we had ten to twelve customers, this year we have five or six,” he said.
Traders say disguising the origin of shipping fuel in Singapore is easier than in Fujairah because of the huge volumes in storage there.
Source: The National
