Iran Starved of Gasoline by Trio Of Swiss Suppliers
The trio are thought to have stopped the flow of supplies to Iran because of the burgeoning level of political risk involved.
Glencore and Trafigura are reported to have stopped their exports at the back end of last year, while more recently Vitol has ceased participating in Iran's tenders for fuel supplies in the last couple of months.
Before the halt in operations, the trio of suppliers were collectively providing Iran with around nearly half of all its gasoline imports.
According to estimations by the Energy Information Administration (EIA) this was equal to 130,000 barrels per day (bpd). Meanwhile, import requirements stand slightly higher. According to Farid Ameri, head of National Iranian Oil Products Distribution, Iran needs to import 22 million liters per day (138,000 bpd) of gasoline and 9 million litres (56,600 bpd) of gasoil.
While Iran is indeed a major oil producer, it is also largely dependent on refined products imports owing to a lack of adequate refining capacity. In addition, fuel subsidies serve to keep demand for gasoline artificially high.
As things stand, Iran's present refining capacity is unable to keep up with demand, leading to a shortfall. Gasoline currently makes up around 80% of the country's refined product imports - according to the EIA.
Iran has historically favoured importing the lion's share of this shortfall but with the threat of US gasoline sanctions looming large, the country has been encouraged to look elsewhere. Iran has been forced to seek more secure sources of supply from countries outside of the US sphere of influence. Unsurprisingly China and Venezuela have been the first to step up to the fold.
In September of last year, Chinese state-backed oil firms began selling gasoline via intermediaries to Iran. At present, Chinese companies are reported to be supplying in the region of 30,000 to 40,000 bpd to Iran. On top of this, the ongoing threat of sanctions has also led to Iran pushing ahead with the long-term solution of heavy investment in its refining sector. In fact, plans for as many seven new refineries are already underway.
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March 11, 2010