Daily Management Review

International Tankers Help Ship Iranian Fuel Resulting in Iran's Oil Exports Surge: Reuters


International Tankers Help Ship Iranian Fuel Resulting in Iran's Oil Exports Surge: Reuters
Following the lifting of sanctions in January, at present Iran has been able to ramp up exports much faster than analysts had expected aided by more than 25 European and Asian-owned supertankers that are shipping Iranian oil, reported Reuters.
More than a third of Iran's crude shipments are now being handled by foreign vessels after an agreement on a temporary insurance fix even though the country had struggled to find partners to ship its oil as recently as April.
"Charterers are buying cargo from Iran and the rest of the world is OK with that," said Odysseus Valatsas, chartering manager at Dynacom Tankers Management. Three of its supertankers have been fixed by Greek owner Dynacom to carry Iranian crude.
Due mainly to some U.S. restrictions on Tehran that remain and prohibit any trade in dollars or the involvement of U.S. firms, including banks and reinsurers, some international shipowners remain reluctant to handle Iranian oil.
Following the lifting of sanctions imposed in 2011 and 2012 over its nuclear program, Iran is seeking to make up for lost trade.
Crude or fuel oil has been loaded in the last two weeks or are about be loaded at Iran's Kharg Island and Bandar Mahshahr terminals by at least 26 foreign tankers with capacity to carry more than 25 million barrels of light and heavy crude oil, as well as fuel oil, reports Reuters citing port loading data as well as live shipping data.
"P&I clubs" - maritime mutual associations that provide "protection and indemnity" insurance to shippers, have increased interim, limited, insurance cover which has made possible the resumption of international shipping of Iranian oil.
The amount covered by so-called "fall-back" shipping insurance was increased from 70 million to 100 million euros ($113.36 million) in April by the International Group of P&I Clubs, which represents the world's top 13 ship insurers.
"In the first days after lifting sanctions only Iranian ships were loaded in the country, mainly due to several problems in finding insurance/reinsurance. The strong interest of the market in these trades pushed all the stakeholders to solve all the problems ... and almost all P&I Clubs have granted their insurance," said Luigi Bruzzone of ship broker Banchero Costa.
Any shortfall in payments from U.S. reinsurers, who are still not allowed to deal with Iran is offset by the "fall-back" cover.
"We are not surprised to see the increase in Iranian cargoes given the progress made by the P&I clubs and obviously the increase in Iranian production. We're interested in such trade ... (but) it will still take time for Iran to be fully integrated as there remain restrictions around dollar denominated transactions," said Brian Gallagher, head of investor relations at leading Belgian tanker owner Euronav, which itself is not involved in Iran yet.

Risks remain because large accidents might not be fully covered even though the partial lifting of sanctions means foreign tankers can now transport Iranian oil.
Hence many of publicly first-tier oil shippers such as Euronav, Teekay Group or Frontline, insurers say, still shy away from carrying Iranian oil.