vlcc hamoon

Iranian VLCC Delivers Fuel Oil To Singapore, Sanctions Create Difficulties for Oil Traders

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March 16, 2012

SINGAPORE (Dow Jones)–Iran is shipping fuel oil to Singapore using a supertanker from its own fleet as Western sanctions make it difficult for buyers to lift cargoes off Iranian coasts.

Hamoon, a Very Large Crude Carrier, is expected to land in Singapore around March 25 with about 280,000 metric tons of fuel oil, said a trader with a company that usually buys fuel oil from Iran. The ship is carrying about 200,000 tons of 380-cst HSFO from the Bandar Abbas refinery and about 80,000 tons of 280-cst straight-run fuel from Bandar Mahshahr.

The cargo was likely sold to European trader Vitol, the trader said, but this couldn’t be confirmed. A Vitol trader declined to comment.

U.S. sanctions don’t prohibit buying Iranian fuel oil, but they are making it difficult to lift the cargoes because shipping companies are finding it hard to insure vessels.

Traders say European participants like Vitol and Royal Dutch Shell PLC(RDSA) are likely to stop buying Iranian fuel oil in the months ahead before fresh sanctions imposed by the European Union come into effect July 1.

Singapore-based Kuo Oil won’t renew its term fuel-oil purchase contract with Iran, while Middle East trading major Bakri Trading Co. Ltd. stopped lifting Iranian fuel oil cargoes nearly six months ago as banks in Dubai refused financing.

The exit of a number of key participants is expected to benefit China’s state-owned oil trader Zhuhai Zhenrong, which until recently was seen lifting its own cargoes.

Traders expect Iran to begin regular shipments of fuel oil to Singapore where it can be sold to local or Chinese traders.

Iran’s Bandar Abbas refinery exports about 300,000 tons a month of 380-centistoke fuel oil that ends up in the Fujairah bunker pool, where it is blended with higher-sulfur fuel oil barrels to make it suitable for use as ship fuel. Much of fuel oil from Bandar Mahshahr already comes to Singapore.

-By Gurdeep Singh, Dow Jones Newswires

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