After the lifting of sanctions, Reuters reported that major oil firms and trade houses are gradually resuming energy trading with Iran but efforts remain very cautious and often face huge legal obstacles, meaning that recording full-scale activity will possibly take up several weeks.
Major trading houses Gunvor and Vitol have each delivered several cargoes of gasoline into Iran in the past few weeks. However, Gunvor and Vitol refused to comment leaving the data in question.
Meanwhile, Swiss trading house Litasco of Russian oil major Lukoil had to cancel a booking of a tanker to transport oil from Iran to Italy in early February, due to what trading sources described as ship insurance difficulties.
“It is still very difficult despite the sanctions’ removal. Dollar clearing is an issue, banks’ letters of credit is an issue, ship insurance is an issue. Loads of people are still very cautious,” said a senior trading executive.
Leading shipping players say efforts by Iran to start exporting oil to Europe are being held up as tanker owners are still struggling to secure insurance for cargoes.
A nuclear deal between world powers and Iran earlier this month led to the removal of European sanctions on the country, but many foreign firms remain wary of violating other sanctions that were imposed by the United States and have not been lifted. Measures are still in place from Washington, prohibiting most business between U.S. persons, U.S. companies and Iran and dollar trades.
“Gasoline exports to Iran are a bit easier as tankers are much smaller, insurance is easier and there are banks which are willing to do this as non-dollar transactions,” one senior trading source familiar with the matter said.
Iran is a gasoline importer despite being the third largest producer within the OPEC group as its outdated refining industry cannot meet rising petrol needs in the country.The country has continued to import gasoline regardless of sanctions, but the biggest names stayed out of the game for the past few years.
Iran’s oil exports have fallen to just over 1 million bpd, from a peak of more than 2.5 million bpd before the imposition of tougher European sanctions in 2012.
“It will take weeks if not months to return to full-scale crude exports to Europe. Tonnes of papers will need to change hands between in-house risk officers, lawyers and banks before the picture is fully clear,” said a trading executive involved in the discussions.
“It’s just a matter of price. If the price is good, we’ll buy it,” Marco Schiavetti, Director of supply and trading with Italy’s Saras said of Iranian oil.