28 Mar 2024
Saturday 27 October 2018 - 12:28
Story Code : 324696

Iran's storage strategy could overcome 'sanctions hype'

Seeking Alpha | Robert Boslego: Iran may be on to a clever strategy to minimize financial impact of the re-imposition of sanctions by the U.S. To the extent it cannot sell all of its exports in the market immediately, it stores those exports in bonded storage in facilities around the world. That oil would eventually be sold when sanctions end, thereby enabling Iran to collect the value at that time, rather than not at all.


This is what is apparently happening in China, according to thisReuters report. Iran still owns the oil, and so Chinese buyers would not be subject to sanctions.


In the meantime, Saudi energy minister Khalid Al-Falih hassaidthat OPEC+ producers are in produce as you can mode. He has said KSA's production has reached 10.7 million barrels per day (mmbd) and can rise another 1.3 mmbd to 12 mmbd. He has also admitted in anotherinterviewthat he is still not sure how the sanctions will affect Irans exports.





If Iran does in fact put 1.5 mmbd into storage, rather than sell it, it will amass about 45 million barrels each month. Such an increase over a 6-month period, assuming OPEC+ produces enough to meet current demand, would create a glut nearly as large as it was at its peak in July 2016.

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