Frontline, one of the world’s largest independent tanker firms, says securing insurance for cargoes carrying oil from Iran is likely to take another two to three months, potentially limiting Iran’s ability to quickly ramp up oil exports.
Iran has been seeking to rapidly increase oil exports since international sanctions were lifted as part of its nuclear deal with world powers, which came into effect in January, but it still faces insurance and financing hurdles.
“We have not lifted anything yet, there are still terms of insurance and payments. There are still some outstanding [issues]. [But] we expect that to be in place within two to three months,” said Robert Hvide Macleod, chief executive of Oslo-listed Frontline.
“That could change, but two to three months [is] our estimate,” he told a conference call with investors on Monday.
The United States still prohibits U.S. individuals or companies from trading with Iran and insurers are trying to clarify details on the parameters of the U.S. sanctions.
“In terms of volumes, [Iran’s] pre-sanctions levels were 2.8 million barrels of oil per day. Their domestic refineries consumed about 1.8 million,” MacLeod said.
“There is a million left to export which they did on their own ships. Now the post-sanctions volumes available into 2016 looks to be between 1.5 million to 2 million barrels.”
MacLeod said once the insurance issue is resolved, Iran would rely more on international shipping. Iranian tankers have been holding unsold oil at Iranian ports and will continue to do so due to a lack of land storage facilities, he said.
“We expect the chartering requirement from Iran to increase and (for) them to fix international tonnage,” he said.
(Additional reporting and writing by Stine Jacobsen; editing by Jonathan Saul and Susan Fenton)
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