Iranian sanctions seen boosting tanker rates

The reimposition of sanctions on Iran – effective from today – is viewed by multiple analysts as a boon for the tanker sector, knocking out much of NITC’s fleet from international trading and increasing the ton/mile situation potentially through till at least the end of the Trump presidency.

Alphatanker data suggests around 1.3m barrels per day of Iranian crude will need to be replaced on the international markets. In recent weeks, Saudi Arabia, Russia, the UAE and Iraq have hiked their crude exports while US crude exports continue to extend records.

“Looking forward, our base case assumes that sanctions will remain in place for the duration of the Trump presidency. This suggests that the 43 large NITC-controlled crude tankers will remain out of the general tanker pool until at least early 2021 which will be bullish for Suezmax and VLCC rates,” Alphatanker stated in its most recent weekly report.

Similarly bullish was London broker Gibson. “Iranian sanctions will benefit the crude tanker market,” Gibson stated in its most recent weekly report, adding: “Quite simply, with Iran’s main customers all seemingly reducing their purchases, they will have to source replacement supplies from elsewhere. Given that these replacement supplies will not be shipped on Iranian tonnage, the wider tanker market will benefit.”

Gibson noted how in recent weeks it had detected higher demand for Atlantic Basin crudes in both the Mediterranean and Asia, whilst Middle East exports – excluding Iran – have also increased over the past month.

In its latest weekly report New York-based brokers Poten & Partners looked at specific beneficial examples for international owners arising from today’s reimposed sanctions. Replacing short-haul Iranian barrels to India with longer haul supplies from West Africa and the US generates additional ton-mile demand, Poten pointed out.

Taking a significant portion of the Iranian tanker fleet and dedicating it to floating storage also takes capacity off the market, Poten pointed out, concluding: “These are examples of factors that tighten market balances and will continue to push up rates.”

One unknown is just how much of the NITC fleet will actually be off the market with multiple reports emerging that many of the company’s ships have switched off their AIS trackers in the last few days to operate in the dark.