Iran tankers go dark to keep selling oil

Vessels switching off transponders to avoid tracking systems

In late October, every single one of Iran’s vessels “went dark”, switching off their transponders to avoid international tracking systems, the first time that has happened since the system went operational in 2016, according to analysts at a new watchdog that monitors global oil shipments.

The ships can now only be tracked manually using satellite imagery. It is part of efforts by Iran and its customers to keep oil flowing ahead of a new US embargo set to hit tomorrow. “Iran has around 30 vessels in the Gulf area, so the past 10 days have been very tricky, but it hasn’t slowed us down. We are keeping watch visually,” added Lisa Ward, co-founder of TankerTrackers.com.

But Joel Hancock, from analysis firm Natixis, said this did not mean their sales would necessarily remain high. “The main issue with tanker trackers is they are tracking exports, maybe not sales,” he told AFP, adding that the ships could just be moving oil to storage facilities in China or elsewhere.

Midnight today will mark a dividing line in the world of oil. Beyond that point, anyone unloading a tanker from Iran risks the full wrath of the US government.

While the US softened its crackdown on the Middle East’s third-biggest oil producer on Friday, allowing some trade to continue, exports are already slumping.

Shipments have plunged 37 per cent since US President Donald Trump announced that he’d reimpose sanctions, and once those penalties kick in on November 5, the overall supply disruption could become the biggest since Libya erupted in civil war at the start of the decade.

“Iran’s oil exports are falling rapidly, and perhaps more and more in the weeks to come,” Fatih Birol, executive director at the International Energy Agency, said.

The US will grant partial exemptions, known as waivers, to eight governments on condition that any purchases from Iran are at “greatly reduced levels,” Secretary of State Michael Pompeo said on Friday.

But the Trump administration ultimately seeks to squeeze Iran’s sales towards “zero” — potentially leaving a gap that even major producers like Saudi Arabia would struggle to fill.

US oil futures climbed to a four-year high near $77 (Dh282) a barrel last month on growing concerns there could be a shortage as sanctions bite deeper. Prices have since eased, aided by the US decision to allow waivers for India, Japan, South Korea and others. Nonetheless, significant risks remain.

Analysts don’t expect a complete halt, but there’s a growing consensus that Trump’s tough stance means crude exports will plunge further than during a previous round of sanctions under Barack Obama’s administration in 2012. Back then they were sliced in half to 1 million barrels a day, according to the IEA, which advises industrialised countries on energy policy.

This time, 1.1 million barrels a day have already been cut from Iran’s shipments — a combination of crude and a light oil called condensate that was spared from curbs in 2012 — according to data compiled by Bloomberg. Production hasn’t fallen as much as some output is going into storage. About 1.76 million barrels a day were exported in October, more than is pumped from the North Sea.