Iran Faces 'Finding Ships' Challenge for Increasing Oil Exports

On Tuesday, April 31, Reuters reported that Iran is struggling to find the necessary tankers for its increasing oil exports. The report noted that Iran's own tankers are currently being used to store oil at sea, and some tankers are not in good condition for sailing. According to an unnamed Iranian government source, Tehran currently has between 55 to 60 tankers. This source did not specify how many of these tankers are currently being used to store unsold oil at sea, but an industrial source told Reuters that 25 to 27 Iranian tankers are solely used for oil storage. However, the Iranian official stated that about 20 tankers are not suitable for transporting oil and need to be sent to repair docks for maintenance and upgrades to meet international standards. After Western sanctions, Iran faced a significant reduction in oil exports and had to store part of its unsold oil on tankers at sea. The U.S. Energy Information Administration estimated that Iran's oil on the water was between 30 to 50 million barrels in January this year. Reuters reports that international tanker companies are still 'reluctant' to transport Iranian oil. The report adds that based on ship tracking data and industrial sources, about 11 Iranian tankers were transporting oil to Asian markets on Tuesday, April 31. The number of tankers is roughly equal to the amount that typically transports Iranian oil to Asia, meaning the Islamic Republic needs foreign tankers to increase exports to Europe and other parts of the world to bring its oil sales back to pre-sanction levels. Before sanctions, Iran exported over two million barrels of oil daily, but this figure dropped to about one million barrels after sanctions. However, since sanctions were lifted in January this year, this number has increased. The latest report from the International Energy Agency states that Iran's oil exports reached 1.55 million barrels per day in March this year. Reuters noted the current boom in the tanker market, stating that ship owners are not keen to transport Iranian oil due to some remaining U.S. restrictions, including the ban on using the dollar in transactions with Iran. The report continues that banking restrictions for dollar transactions with Iran are one of the biggest problems for cooperation with the country, as prices in the oil market are calculated in dollars. It adds that since the lifting of sanctions, eight foreign tankers have transported about eight million barrels of Iranian oil to European markets, which is only equivalent to ten days of Iran's oil exports to Europe before sanctions. Until 2011, Iran exported 800,000 barrels of oil daily to Europe. Reuters states that no Iranian tanker has headed to Europe since the lifting of sanctions.