Brokers Gibson have made the case for the impending reimposition of sanctions against Iran as being a good thing for international tanker owners.
November 5 marks the day when sanctions are put back in place against the Middle Eastern republic.
Iran is likely to find fewer buyers for its crude in six weeks’ time. South Korea has stopped buying all together, with the last cargo imported in July, and appears willing to comply with US demands. Japan and India have also reduced imports in recent months, but have sought waivers from the US, and it looks likely that they will both continue to import at least some volumes of Iranian crude after sanctions are imposed. Reliance Industries and Nayara (formerly Essar) look set to stop purchases altogether but the state owned refiners appear prepared to continue imports.
In Europe, Turkey is likely to be the only nation to continue to take Iranian crude come November 5.
By contrast, Gibson reckons China might actually step up purchases as Iran is forced to offer increasingly attractive discounts, whilst utilisating state owned NITC to handle delivery and cargo insurance.
“In short, Iran will have less buyers. Even if China takes more, total Iranian exports will have to decline. Replacement barrels from elsewhere will therefore be needed,” Gibson stated in its most recent weekly report, concluding: “[I]f the lost Iranian barrels are compensated by supplies from elsewhere, there will be more demand for the international tanker fleet, as the NITC fleet will not be able to compete for these cargoes.”