Iran cuts oil production to lowest in 40 years as storage fills
IRAN Iran has slashed crude oil production to its lowest level in four decades as storage tanks and vessels are almost completely full due to a drop in exports and refinery run cuts caused by the coronavirus pandemic, industry data showed. Total onshore crude stocks surged to 54 million barrels in April from 15 million barrels in January, and swelled further to 63 million barrels in June, according to FGE Energy. Market intelligence firm Kpler estimated Iranian average onshore crude storage for June to be approximately 66 million barrels. That is about 85 percent of available onshore storage capacity.
“However, it will technically not be possible to fill tanks to 100 percent given technical constraints at storage tanks and potential infrastructure bottlenecks,” said Homayoun Falakshahi, a senior analyst at Kpler. Tensions between Tehran and Washington have ratcheted up since 2018, when the United States withdrew from a 2015 nuclear pact between Iran and six major powers and President Donald Trump reimposed sanctions on Iran, hammering vital oil exports. Iran’s floating storage is also filling up. Shipping sources said Iran was estimated to be using roughly 30 tankers to store oil most of them supertankers, each of which can carry a maximum of two million barrels of oil.
This would equate to more than 50 million barrels of oil being stored, which has been static for some months. This is likely to be a combination of crude and condensate, a very light grade of crude, the sources said. Refinitiv data showed a maximum of 56.4 million barrels were being held in floating storage by July 3. Iran’s fleet of crude oil tankers numbers 54 vessels, data from valuations specialist VesselsValue showed. “Iran storage is expected to continue as we do not see these vessels being able to trade anytime soon,” a spokesman for shipping group NORDEN said. (Al Jazeera)