Iranian VLCCs back on storage duty
Iran is using at least half of its fleet of 29 very large crude carriers for temporary floating storage, as refineries in Asia shut down for maintenance.
This is the first time in two years that Iran"s national oil company has employed larger numbers of its ships for floating storage, with an estimated 22 VLCCs used in May 2008, including some that were time-chartered from other owners.
London broker ICAP Shipping said Iran stored as much as 30m barrels per day and believed volumes in 2010 had again reached these levels, as refinery maintainence coincided with greater difficulties for buyers in securing credit for sales.
Some 14 VLCCs and one suezmax tanker, all owned by National Iranian Tanker Co ? totalling 3.5m tonnes of crude, or 26.8m bpd ? were now employed as floating storage, according to data from Lloyd"s List Intelligence.
A further four VLCCS were possibly being used, after loading over the last month but not specifying any destination, LLI estimated.
NITC has a fleet of 43 tankers, including 29 VLCCs. The company"s tankers account for about a third of the world"s crude now in floating storage.
Iran"s heavy-grade oil can only be used by a limited number of refineries with specialist equipment, mostly in Asia, also limiting buyers during the seasonal downturn.
The world"s second-largest Opec exporter began building up excess crude as early as December when VLCCs commenced storage, LLI data showed.
Since then tonnage build-up has been gradual, with three VLCCs joining floating storage duties each month and four in March.
The VLCCs are expected to be used until June, when the summer driving season in the US kickstarts a global upsurge in oil demand, although trade embargoes prevent refineries there from purchasing Iranian crude.
Iranian temporary oil storage was also a phenomenon in 2006, and on each occasion has been credited for boosting spot rates for the global fleet of 544 VLCCs, as vessels are removed from the market.
The country has no onshore storage for oil produced at the offshore Soroush and Nowruz oilfields.
Iran exported 3.47m bpd in March, according to the International Energy Agency"s monthly report.
The use of tankers for short-term floating storage over the last 18 months has normally been driven by oil traders, with numbers of tankers chartered increasing as the difference in current and future prices rises.
The IEA"s monthly oil report found 65m bpd were used for floating storage in March, compared with 55m bpd in February. Based on LLI data estimates, about a third of crude storage was in Iran.
The widening oil contango over the last week could see more VLCCs used by traders for floating storage, ICAP Shipping said on Friday.