Sources have revealed that Iran has had to deploy more than half of its entire tanker fleet as offshore storage for surplus oil supplies.
It was claimed that the National Iranian Tanker Company (NITC) was using 14 of its 25 2 million bbl capacity tankers as well as 5 of 9 Suezmax tankers with a capacity of 1 million bbls each. In sum, 33 million of Iran’s 59 million bbl total tanker capacity (approximately 56%) is being used to store oil offshore as production continues despite international sanctions restricting exports.
The sources also reported to Reuters that storage tanks at Iran’s Kharg island terminal, which have a capacity of 23 million bbls were also full. One sources stated that, “The NITC fleet was deployed to Kharg Island to load cargo to prevent shore tank overflows. This has been going on since March.”
Earlier industry estimates for the amount of oil held in by in Iran’s floating storage were much lower with a range of 8 – 16 million bbls: these estimates were based upon satellite tracking data used to keep track of oil shipments. The difference between these estimates and the most recently revealed figures was explained when one of the sources that the tracking devices on many of the tankers had been turned off, “The ship’s transponders have been switched off because they don’t want to be detected."
Iran’s oil export market has shrunk dramatically, with European nations, China, Japan, and South Korea all making sharp cuts to their purchases.
Analysts have pointed out that were Iran able to sell its oil, it would not be using floating storage in this manner. If Iran were to run out of storage capacity, its only real option would be to suspend production signalling a heavy diplomatic blow for the regime. Such an event would be an unequivocal sign that the sanctions were having an effect upon the increasingly isolated nation, which has repeatedly said that sanctions will not stop its oil trade.
Edited from various sources by David Bizley
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