Iranian tanker sets sail as trading return looms

The departure of a giant Iranian supertanker from the flotilla of vessels storing oil off the country’s coast has triggered speculation Tehran is moving to ramp up its crude exports.

After reaching a nuclear deal with western powers this week, Iran is preparing for the lifting of economic sanctions, which have more than halved its oil exports since 2011, within the next six months.

Starla, a 2 million barrel vessel owned by the National Iranian Tanker Company (NITC), had been sitting for several months near the Strait of Hormuz, the thin waterway separating Iran from the Gulf that is the busiest oil route in the world.

This week Starla set sail with a nominal destination of Singapore, according to ship brokers and satellite tracking data. It stopped briefly at a ship-to-ship transfer point off the United Arab Emirates called Khor Fakkan, which has been identified by UK insurers as a spot used by smugglers to try to disguise the origin of Iranian oil. It has since sailed out into the Arabian Sea.

Analysts said it was unlikely Iran was trying to circumvent sanctions with this particular vessel. But it would move the oil closer to customers in Asia for a quicker sale once sanctions are lifted, while also signalling its looming return to the oil market.

“It’s on its way to Singapore, but that doesn’t mean it will discharge. It could just sit there waiting,” said Svetlana Kourmpeti, an analyst at ship brokers Gibson. She said they were not aware if anyone had yet the bought the cargo.

“It will be closer to customers when the time comes.”

Iran has previously taken other vessels out of floating storage and sent them to Asia. US-led sanctions have cut Iran’s exports from about 2.5m in 2011 but it still sells about 1.1 million barrels a month.

Oil it cannot sell or store on land has been put on vessels at sea. There is estimated to be 40-50 million barrels of Iranian crude oil and condensate, a type of ultralight oil, stored at sea. Iran is expected to lift production in the coming months.

Iran’s oil minister, Bijan Zanganeh, predicted this week that exports will increase by 500,000 b/d immediately after sanctions are lifted and up to 1m b/d 5-6 months after that, a number that analysts view as realistic, though possibly over a slightly longer timeframe.

“Once free trade is fully available Iran will need to be careful not to dump all this oil on the market,” said Neil Atkinson, head of analysis at Lloyd’s List Intelligence.

“They don’t want it to look like the first day of the sales.”

Oil prices have fallen 11 per cent this month, pressured by the Iranian deal. Brent, the international oil marker, was below $57 a barrel on Friday while West Texas Intermediate, the US benchmark, fell close to $50 a barrel.

There are other signs Iran may be looking to quickly increase exports.

In April, a NITC supertanker called ‘Happiness’, which had been at anchor for at least three months according to ship brokers, sailed from Iran to China. Since arriving in June it has been parked, close to fully-laden, off the port city of Dalian, ship-tracking data shows.

China has a waiver from the United States to import a certain amount of Iranian crude oil a month. Along with Japan, South Korea, India and Turkey they can buy a combined 1m b/d under the waiver, which is reviewed by the US every six months.

Last Sunday, as diplomats from Iran were negotiating in Vienna, Happiness sailed into an loading jetty that is connected to a vast oil storage and terminal facility in Dalian. While there it appears to have unloaded a small amount of crude. The boat’s draft in the water, which rises and falls depending on how much oil it is carrying, fell to 80 per cent from 88 per cent.

On Friday Happiness left Dalian and was sailing east towards the Korean peninsula.