News: Iran Economy

Iran Regime Trying to Update Ageing Oil Tankers Despite US Sanctions

Iran Regime Trying to Update Ageing Oil Tankers Despite US Sanctions

Written by Staff Writer on .

By Staff Writer

Iran is covertly looking for second-hand oil tankers to update its ageing fleet and maintain the flow of crude exports in spite of US sanctions, according to Iranian and Western sources.

Since US sanctions snapped back into place last November, Iran’s talks with South Korea and Panama about replacement tankers have stalled.

Now the Gulf nation is looking to countries like Vietnam to fill the void, in order to continue shipping crude oil to the eight countries that were given sanctions waivers, including China, India and Japan, South Korea, Taiwan, Turkey, Italy, and Greece, which is important to the Regime because oil exports account for 70% of Iran’s revenues.

Iran currently has more than 50 tankers, but over a fifth are being used to store unsold stocks in its territorial waters because of Iran’s limited onshore storage capacity.

However, potential sellers are wary of violating US sanctions given that a Greek network was blacklisted for helping Iran buy tankers under previous sanctions.

One shipping source said: “Iran has been looking for ships, but this time around it is going to be harder - there is so much more scrutiny now. It is going to take them longer.”

But that is not Iran’s only problem when it comes to exporting oil because Western insurers are refusing to cover shipments, meaning that the Regime has had to use domestic insurers with less experience and monetary backing.

Mike Salthouse, from the International Group, the representative for the insurers of 90% of the world's commercial shipping, said Western insurers are unlikely to do business with Iranian shipping companies.

He said: “The biggest problem for insurers these days is finding a bank willing to handle a payment for goods or services where the beneficiary is designated by the US. Banks will not engage when you mention the Iran word.”

Given the lack of appropriate insurance and the age of the ships, the US has warned that countries accepting Iranian oil could be on the hook for clearing up oil spills or paying for damages caused by the ships in the buyer’s territorial waters. In November, US Special Representative for Iran, Brian Hook, described Iran’s tanker sector as a “floating liability”.

M. Varzi, an independent oil consultant who has previously worked at the state-run National Iranian Oil Co., said: "Whatever sector you look at, companies will keep in mind being cut off from the U.S. financial system when deciding whether to trade with Iran."

In addition, there is increasing evidence that Iran is trying to disguise their shipping vessels and their routes by turning off tracking data on their ships, which could result in maritime accidents, and registering their ships with Panama, which means that countries or companies may accidentally violate sanctions.

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