Reuters reports an over 40% decline in the reserves that were held on the shore in early October
As an attempt to benefit from the exemption granted by OPEC, Iran has sold over 13 million barrels of oil, which was held at the ports. Reuters reports an over 40% decline in the reserves that were held on the shore in early October. The Country Caller views the recent development as a positive development, given the fact that sixth largest oil producer in the world experienced oversupply throughout 2016. Considering the objectives set by Iran to revert back to the pre-sanction production levels, the massive selling of the commodity seems justified in a way.
Major countries that imported oil from Iran include China, India, south Korea, and European countries. The fact that the country does not have the kind of infrastructure to store the commodity has increased its reliance on the tanker fleet to store the excess oil. A former official of Iran’s state-owned oil company said, “Iran got its way at OPEC and the Saudis agreed not to limit their capabilities. Iran will go ahead and look to export whatever they can for winter demand (globally),” further to this, he added that storing oil is quite expensive for Iran therefore it is pursuing its commercial policy to get rid of the excess output.
Iran is now utilizing its tankers to carry out deliveries, or make ship to ship transfers rather than deploying them to store the supplies. As mentioned earlier, TCC does not believe it is a very bad sign as OPECs output has dropped from its highest production levels recently. Moreover, US crude inventories also dropped much more than analysts expected
Going forward, we expect the commodity to trade between $53 to $55 as more an d more developments come up. TCC will continue to update on any further developments relating to oil.
Crude oil trades at $53.72, while Brent trades at $56.72 (10:53 AM EDT)