With U.S. sanctions on Iran's oil exports just six weeks away, at least ten Iranian oil supertankers have gone dark, not having broadcast any signal for at least a week, tanker tracking data compiled by Bloomberg shows, suggesting that Tehran may have resurrected the old unconventional tactic to conceal its crude oil shipments by switching off transponders on board.
If Iran is deploying this tactic, tanker tracking data of Iranian oil exports may become less and less reliable as the starting date for the U.S. sanctions on Tehran's oil approaches.
Satellites and shore stations haven't received any signals from the ten very large crude carriers (VLCC), each capable of transporting up to 2 million barrels of oil, for at least seven days, according to Bloomberg data. According to the tanker-tracking data, seven of those vessels, when last seen, were carrying a total of 13 million barrels of crude oil and condensate, the ultra-light oil that Iran pumps from its natural gas fields. The last known location of most of the tankers is in the Persian Gulf.
According to Bloomberg, while the loss of signals from tankers can be attributed to seasonal weather conditions, disruptions from atmospheric conditions are typically much shorter. Once the tankers leave the Persian Gulf, they should have shown on satellite tracking systems if they have their tracking systems switched on. Related: Iran Starts Air Force Drills Near The World's Crucial Oil Chokepoint
Analysts are facing two major headwinds in their estimation of how low Iranian oil exports could sink. One is how much of Iran's oil China, India, and Europe will buy in October and then in November, when the sanctions kick in. The other is the concern that tanker tracking data may become increasingly unreliable as Iran could use 'unconventional' methods of keeping its oil sales on track, like switching off tracking devices on tankers-a method that Tehran is said to have used in the previous round of sanctions in 2012-2015.
Analysts have started to assume that the U.S. sanctions on Iran's oil may remove more than 1 million bpd from the oil market. Earlier estimates were of around 500,000 bpd loss from Iran, but this was before the U.S. started to signal that waivers would be given sparingly, if at all, and that Washington expects all nations to cut off oil trade with Iran or risk secondary sanctions.
By Tsvetana Paraskova for Oilprice.com
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Comments
I have been saying for quite a while that US sanctions on Iran are doomed to fail and that Iran will not lose a single barrel of its oil exports. My reasoning is based on the
following five market realities.
The first is that the overwhelming majority of nations of the world including US allies and major buyers of Iranian crude are against the principle of sanctions on Iran as unfair and will not therefore comply with them and will continue to buy Iranian crude whether in violation of the sanctions or by a US waiver as would be the case with Japan, South Korea and Taiwan.
The second is the petro-yuan which has virtually nullified the effectiveness of US sanctions and provided an alternative way to bypass the sanctions and petrodollar.
A third reality is that China which is being subjected to intrusive US tariffs and Russia which has been battling US sanctions since 2014 will ensure the failure of US sanctions against Iran as a sort of retaliation against US tariffs and sanctions against them.
A fourth reality is that China can singlehandedly neutralize US sanctions by deciding to buy the entire Iranian oil exports amounting to 2.5 mbd as a retaliation against escalating US trade war against it and paying for them in petrodollar.
A fifth reality is that 95% of Iran’s oil exports go to countries who declared that they will not comply by US sanctions, namely China (35%), India (33%), the European Union (20%) and Turkey (7%). The remaining 5% of Iran’s oil exports goes to South Korea and Japan who have already said they will apply for a US waiver and most probably they will get.
Furthermore, Iran is within its legitimate rights to use whatever methods to evade US sanctions including switching off oil tanker tracking system.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London