Iran, the world’s fifth-largest oil producing nation, is increasing the amount of oil is stores in tankers at sea.
Iranian officials say this is due to refinery overhauls and seasonality, but some industry players believe it’s due to an inability to sell all of their production right now.
One source estimated Iran had crude on 19 very large crude carriers (VLCCs) and one smaller suezmax tanker, compared with around 12 VLCCs at the end of March. A VLCC can store up to 2 million barrels of crude oil, while a suezmax can store up to 1 million barrels.
Iranian officials declined to say how much crude was being stored, but confirmed that there was oil on tankers.
“It’s not as many as 20 vessels, but some of our customers do have crude on tankers in the Gulf,” one Iranian oil official said. “One of the reasons is due to refinery overhauls.” Global demand typically falls in the second quarter as northern hemisphere refineries undertake work on units and switch to heavier
Much of Iran’s crude is heavy and has a high sulphur content, making it harder and more expensive for refiners to convert it into valued transport fuels. “One theory is they are having trouble selling the cargo,” a shipping source said. “It could be due to lack of demand for some heavy Iranian crude.”
There is some limit to world oil demand right now, despite the price strength oil has exhibited and the global economy rebound.
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