Iran Sidesteps Sanctions to Export its Fuel Oil

From Yahoo News

By Humeyra Pamuk and Emma Farge

Iran is becoming increasingly creative in dodging Western sanctions, managing to sell a rising volume of fuel oil to generate revenue equal to up to a third of its crude exports, which have been badly hit by restrictions.

Compared with the first half of the year, Iran has on average exported more fuel oil per month since July, when European Union oil and shipping insurance sanctions came into effect and more than halved its crude exports.

Even for companies with no link to the EU, sanctions on financing and shipping insurance discourage would-be customers.

Iran uses fuel oil for electricity generation and to power ships, but unlike other more valuable refined products such as diesel or gasoline, it has a surplus to export from the 70,000 tonnes a day it produces.

The July sanctions slashed the OPEC member’s fuel oil sales initially, traders and analysts say, as term customers cancelled contracts, but sales have since rebounded thanks to the innovative methods of Gulf-based middlemen and Iran’s market-savvy oil officials.

The Islamic Republic sold an average 648,000 tonnes of fuel oil monthly from July to October, up from 636,000 tonnes for January to June, according to data from a company that tracks Iran’s oil shipments.

That brought in an average of $410 million per month. August income was more than double that figure, helping Iran to recoup a portion of the $3.8 billion it has lost in monthly crude export revenues since July.

Salar Moradi, oil analyst at FACTS Global Energy, said Iran fuel oil exports have risen from lows of around 400,000 tonnes a month this summer.

“The National Iranian Oil Company has been very successful in finding new strategies to circumvent sanctions and sold its fuel oil to Asia in August and September. Now we think Middle Eastern buyers of Iranian fuel oil have reappeared,” he said.

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