Saudi Arabia has reportedly banned Iranian oil tankers from entering its waters in an effort to slow Iran’s oil exports.
The FT reports that Iranian ships are restricted from entering Saudi ports, and Bahrain, a Saudi ally, has issued similar restrictions. Also, Iran has been unable to access some oil in storage at a facility in Egypt, which is partially owned by Saudi Arabia. The efforts may have had an impact, as even Iranian oil executives admit that they have been somewhat stymied. Oil sitting in floating storage off the coast of Iran has climbed by 10 percent this year to 50 million barrels.
Before western sanctions Iran used to send oil by the SUMED pipeline across Egypt, allowing oil to move from the Red Sea to the Mediterranean Sea. The FT says that Saudi Arabia is blocking Iran from access to the pipeline, which would ease oil exports to Europe. Related: Oil Prices See-Saw After Friday’s Rout
On the diplomatic track, the two countries are also at odds over the pending OPEC production freeze deal. Several major OPEC members plus Russia are set to meet in Doha on April 17, but Iran has said that it will not abide by any freeze deal. Saudi Arabia said last week that it would only participate if Iran also signed up, raising doubts about the viability of the deal. Even with Saudi Arabia, the freeze would amount to little without Iran, since the participating countries have little scope for raising production. Related: Horizontal Land Rig Count Summary 1st April 2016
Meanwhile, despite the Saudi campaign to slow the growth of Iran’s oil exports, Iran is lifting exports. Iranian oil minister Bijan Zanganeh said on April 3 that Iran managed to increase oil and gas condensate exports by 250,000 barrels per day in March, allowing exports to surpass the 2 million-barrel-per-day mark.
Iran is still struggling to obtain full access to insurance for its shipments, and ongoing U.S. banking restrictions are throwing hurdles up for Iran’s oil sector. Still, it is making steady progress ramping up exports.
By Charles Kennedy of Oilprice.com
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