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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Iran stops fuel oil exports

01 Aug 2008 10:04 GMT

Decision looks set to have repercussions on bunker supplies in Fujairah.



Iran looks set to follow the lead of Saudi Arabia and halt shipments of fuel oil to Asia after its peak summer demand season. Reuters reports.

Sources familiar with the country's fuel export programme are reported to have confirmed that Iran will soon begin focussing on building up stocks of fuel oil ahead of the winter season, due to a heavy fourth-quarter maintenance season.

Over the previous two winters, Iran has reduced exports of fuel oil due to an increase in domestic consumption. This year, local sources have said that Iran is starting to build stocks more than four months ahead of winter, because it has more than 400,000 barrels per day (bpd) of refining capacity offline due to scheduled maintenance.

Iran's decision follows news earlier this week that Saudi Arabian refiner Saudi Aramco has decided not to sell any spot fuel oil after its peak summer demand season, on rising requirements from domestic utilities and new secondary refining units.

Aramco, the largest fuel oil exporter from the Middle East into East Asia, typically offers one or two 80,000 tonne parcels of fuel oil onto the spot export market every month outside the summer period. It usually offers a 380-centistoke (cst) fuel oil cargo from its joint-venture refinery in Jubail or a 180-centistoke (cst) parcel from its Ras Tanura oil processing facility. The company will now absorb these cargoes for use in its domestic market.

The decision to limit fuel oil output by the Middle East's two largest exporters looks set to worsen the current tight supply in Asia, helping to raise crack levels to approximately $13-$14 a barrel below Dubai crude, the highest in seven months.

A decrease in fuel oil shipments out of Iran over the next few months is also likely to have repercussions on the Middle East bunkering market. Over the past two winters Iran has slashed exports of fuel oil to the Middle East's major bunkering port, Fujairah, by up to 60 percent.

The Fujairah bunker market is one of the largest in the world with estimated volumes at between 13 million and 15 million metric tonnes per year.

Iran, a regular exporter of fuel oil to Asia, has been shipping approximately 1.2 million tonnes of residual fuel oil monthly since April.






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