2 Million Barrels of Iranian Oil Heading to Singapore in First Move Since Sanctions Deal

Friday July 17, 2015

An Iranian supertanker understood to have been used as floating storage in Iranian waters since December, is heading to Singapore loaded with two million barrels of oil, Reuters reports.

It is believed to be the first such shipment of oil from the Islamic Republic since the so-called P5+1 global powers earlier this week reached a deal over sanctions against Iran, and comes despite some analysts predicting it would most likely be the second half of 2016 before Iran made a return to the market.

Iran is "likely assuming that either a small increase in exports will not undermine the historic accord reached, or, that no one would notice," analysts at Macquarie wrote in a research note.

Data from VesselsValue.com shows NITC's 318,000 DWT, 2012 Chinese built tanker Starla is currently in the Gulf of Oman and has an ETA in Singapore of July 28, 2015.

"This is the first tanker to come off floating storage," a source was quoted as saying.

"One of the scenarios is it could do [a ship to ship] operation, although nothing is known at the moment."

P&I clubs Thursday said that while this week's deal will mean that existing sanctions can be lifted and protection and indemnity insurance will once again become available to vessels carrying Iranian oil, it will be at least 90 days before any agreement comes into force and shippers have been warned to exercise caution handling Iranian product.

Under Pressure

Sources indicate that Iran is currently storing as much as 51.4 million barrels of crude in floating storage in its waters, and analysts have expressed concern that today's developments could be the start of a flood of oil coming onto the market, putting significant downward pressure on prices.

That pressure would be in addition to the fact that last month Iran told members of the Organization of Petroleum Exporting Countries (OPEC) to "make room" for an estimated additional 1 million barrels a day of supply that it intends to produce within six months of sanctions being removed.

Earlier this week analyst Carley Garner warned players to prepare for crude falling as low as $30 per barrel, or $226 per metric tonne (pmt), as a result of the additional Iranian oil, which it if happened would mean bunker buyers could reasonably expect IFO380 prices to fall as low as $158 pmt.