Regular European buyers of Iranian crude said Thursday it was becoming more difficult to lift cargoes from Iran because ship owners have become increasingly reluctant to call at Iranian ports over fears about being properly insured and because of the likelihood of additional US sanctions targeting shippers.
European Union sanctions, approved January 23 and due to come into effect fully on July 1, ban the import and transport of Iranian oil.
Companies have been given several months to phase out existing crude supply contracts with Iran, but the EU bans the signing of new contracts with immediate effect.
"It shall be prohibited to provide, directly or indirectly, financing or financial assistance, including financial derivatives, as well as insurance and reinsurance, related to the import, purchase, or transport of Iranian crude oil and petroleum products," the legislation says.
Earlier Thursday, the US Senate's Banking, Housing and Urban Affairs Committee passed a bill that would extend US sanctions to Iranian energy joint ventures, expand sanctions on Iran's petrochemical sector and identify other sanctionable activities of the Iranian regime. The bill, an earlier version of which was passed by the House of Representatives in December, will now go to the full Senate for consideration.
A key provision of the House bill that has not made it into the Senate version at this point would block ships from loading or unloading cargo in US ports if they had visited a port in Iran, Syria or North Korea in the preceding 180 days.
The provision was not included in the bill because it is not under the Banking Committee's jurisdiction, an aide to Democrat Senator Robert Menendez said. However, the aide added, Menendez intends to offer the provision as an amendment when the bill reaches the full Senate for debate.
SOME SHIPS AVOIDING IRAN ALREADY
Some ship owners, concerned both about this possible measure against shipping and about a spike in insurance costs due to threats from Iran to close the Strait of Hormuz in response to the tightening noose of international sanctions, have already stopped allowing their vessels to travel to Iran.
"Most of the shipowners now do not like to call [at] Iranian ports," said one regular buyer of Iranian crude. "In my opinion, some shipowners are afraid of possible future rejection [by the US] of vessels that [may have] called at Iranian ports during the last few months."
And it is not just voyages to Iran itself that are causing anxiety. Iran's main crude terminal is at Kharg Island in the northern Persian Gulf, but the National Iranian Oil Company also delivers crude to Sidi Kerir on Egypt's Mediterranean coast, from where the voyage to Europe is relatively short.
"It is getting more and more difficult [to lift from Iran now]. Some shipowners have some trouble in going not only to Kharg Island but also to Sidi Kerir," a trader said. "They are afraid of possible sanctions from the US...now there are more and more ships that do not want to carry Iranian crude."
Shipping sources said that at least a couple of Iranian crude cargoes were being offered on the spot market out of Egyptian port Sidi Kerir this week. The cargoes have been struggling to find ships because owners were concerned that they not be properly insured.
"There are not many owners which will grant the voyage, I think the main issue is their P&I [|Protection & Indemnity] which doesn't cover," a charterer said.
Shipping and trading sources said vessels willing to load from Iran or carry Iranian crude would command high premiums to current Worldscale freight rates.
"We might see a few premiums for ships that carry Iranian crude out of Sidi Kerir. The EU is very rigorous, strict and demanding and regardless of whether it is loaded in Iran or it is carrying Iranian crude, shipowners are cautious of Iran," a source with a shipowner said.
Iran's threat to close the Strait of Hormuz, the key waterway through which as much as 17 million b/d of oil passes, is another factor worrying shipowners.
"It is more difficult to find vessels which will go to Kharg Island. Iran is threatening to close the Strait of Hormuz," one trader said. "No shipowner wants to have its vessel blocked inside."
