EMEA News
Iranian Product is 'Killing the Bunker Market in Fujairah'
Iran is moving fuel oil through the United Arab Emirates (UAE) and selling it for cash at a heavy discount to bypass sanctions, industry sources have told Platts.
The sources said the cheap oil is hurting the local market, with one source saying it was "ultra depressed" because of the Iranian fuel oil trade.
"Non Iranian bunker sales in Fujairah gone from a few hundred thousand tonnes to almost zero," one source said, adding that the sales are "killing the bunker market in Fujairah."
UAE-based trading company Fal Oil Co., which is struggling with debt and has been placed under U.S. sanctions for conducting business with Iran, appears to have revived an entity known as Horizon Energy LLC to carry out the fuel oil sales.
"They are trading bits and pieces of fuel oil" to try to keep Fal from going under since bad debt has forced it to shut down its trading operations and sell two of its tankers, one source said.
Fal Oil seems to be working directly with the Iranian oil ministry rather than through the Iranian National Oil Company, and the oil is being sold from floating storage offshore Fajairah and off Khor Kakkan on the Gulf of Oman.
Small bunker traders in the UAE are buying the oil, blending it and shipping it out.
"What they have managed to do is absolutely thrash the market," said one UAE-based trading source.
"They're getting and selling this Iranian stuff, and offering down $5-7 per metric tonne (pmt) lower than where the market is.
"I heard those guys did 610 pmt today when the [Fujairah] market is trading $615 pmt."
Previous reports have indicated that Iran has been hiding millions of barrels of crude oil from western sanctions along the East Malaysian coast, using vessels tied to Titan Petrochemicals Group Ltd., while Vitol has come under fire for buying and selling Iranian fuel oil.
Last month, the European Union (EU) tightened its restrictions on Iranian oil, and the Islamic Republic of Iran Shipping Lines (IRISL) said Western sanctions have caused it huge losses.
