Iran bitumen exports hit hard by EU insurance ban

16 July 2012 09:31  [Source: ICIS news]

Iranian oil facilitySINGAPORE (ICIS)--Iran’s bitumen exports have dropped significantly this month following an EU ban on providing insurance for tankers carrying Iranian oil from 1 July, traders said on Monday.

The ban is part of economic sanctions by the west aimed at deterring Iran from developing nuclear weapons.

The impact from the ban is major as 90% of the world’s tanker insurance is provided by European insurers, said a source from a major bitumen trader headquartered in the United Arab Emirates.

On 3 July, the first trading day after the ban took effect, 49,950 tonnes of bitumen export deals were done at the Iran Mercantile Exchange (IME), down by 17.3% week on week. Export volumes fell to 1,950 tonnes on 10 July, down by 96% week on week, IME data showed.

IME is the trading platform for Iranian bitumen producers selling their products to traders, and opens every Tuesday for such trading. Traders then export those cargoes to buyers around the world.

Pasargad Oil, the largest bitumen producer in Iran, has not been able to sell any July cargoes, according to IME data.

Demand for Iranian bitumen from Africa, which accounts for 30–35% of Iran’s total bitumen exports, suffered the biggest drop because only two countries in the region – Kenya and Tanzania – can provide insurance, according to traders.

The countries now providing insurance for Iranian tankers include China, Singapore, Vietnam and a few in the Middle East.

Some Middle East-based traders may choose to ship Iranian bitumen to countries that provide insurance for Iranian tankers and then re-route to other destinations, an Iranian trader said.

However, this means higher costs and potential financial risks, which some African buyers have said they will not accept,  the Iran-based trader said.

Iran is the largest bitumen exporter in the Middle East. It exported around 2m tonnes/year of bitumen in 2010–2011, traders said.

By: Alfa Li
020-3762 0271

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