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Can The Oil Price Rally Continue?

Can The Oil Price Rally Continue?

Oil markets took a breather…

Iranian Oil Tanker Explodes, Could Continue To Burn For A Month

oil tanker

An Iranian tanker carrying condensate that collided with a Chinese freight ship on Saturday is still burning and could burn for a month, the South Korean Ministry of Oceans and Fisheries said, as quoted by Reuters. There were fears the tanker could explode, making it even harder to clean up any spilled condensate and find the missing members of the tanker’s crew: one body was found on Monday, but 31 crew members remain missing.

Around noon GMT, Reuters reported that an explosion had indeed occurred aboard the tanker, which forced the rescue crews trying to extinguish the fire to pull away. The explosion followed an attempt to use foam to extinguish the fire.

An earlier Reuters report relayed worries on the part of the Korean authorities about the possibility of a bunker fuel spill in case the tanker explodes or sinks. Otherwise, they estimate the vessel could continue burning for another two to four weeks, based on previous tanker accidents.

Prior to the explosion, Chinese authorities had engaged in efforts to prevent major environmental damage, noting that for the time being no large spill had been detected. The Panama-registered Sanchi, a Suezmax, carried 136,000 tons of condensate, which, the Chinese authorities said, would quickly evaporate when it reaches the water, leaving little residue.

However, condensate is highly flammable and very toxic, which could create a different kind of problem for the search and rescue teams around the vessel, whose task has been already made extra-difficult by the stormy weather.

Related: Heroes, Gods And Genghis Khan: Naming An Oilfield

The Sanchi was carrying condensate to South Korea when it collided with a Chinese freighter in the South China Sea on Saturday, catching fire. The U.S. Navy joined the search and rescue efforts on Sunday, sending a military aircraft to the area, which spans 3,600 square nautical miles. The vessel’s cargo is worth around US$60 million at current crude oil prices.

The company that bought the condensate is South Korean Hanwa Total Petrochemical, a joint venture between South Korean Hanwa General Chemicals and French Total. At the moment, it is trying to find a replacement for the lost cargo. A spokesman told Reuters that there are three alternatives: Hanwa can use condensate it has in stock, order another cargo from Iran, or approach Qatar as an alternative supplier.

By Irina Slav for Oilprice.com

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