Tanker operators are bracing themselves for headwinds from U.S. and European Union trade sanctions imposed on Iranian oil, adding to the many challenges the sector already faces, Standard & Poor’s Ratings Services said.
“The standoff between Iran and the E.U. and the U.S. only adds to the litany of problems tanker operators are facing, including prolonged weak shipping rates and sustained overcapacity, neither of which we believe will ebb before 2013,” S&P credit analyst Funmi Afonja said.
Last month, the European Union banned the International Group of P&I Clubs from underwriting insurance to shipping companies that transport crude oil and petroleum products from Iran. The ban could have wide-ranging effects on tanker operations in Iran, as International Group members insure 95% of tanker ships currently operating worldwide. Additionally, on July 1, new sanctions prohibiting importation of Iranian oil into Europe will go into effect.
Tankers will have fewer shipments to carry, forcing down tanker rates, as some or all of Iran’s crude oil will stay in the country, Afonja said. Iran typically provides 6% of global crude-oil exports.
S&P said it is maintaining its negative outlook on the tanker industry.
-By Ben Fox Rubin, Dow Jones Newswires