21 March 2013 06:37 [Source: ICIS news]
SINGAPORE (ICIS)--The availability of Group I base oil cargoes from Iran has tightened after refiners Sepahan oil and Iranol oil began reducing their output a month ago ahead of the Iranian New Year holidays, according to market sources.
The Iranian base oil market will remain shut from 21 March to 5 April for the holidays which began on Thursday, middle east traders said.
“There is no product coming out of Iran for the past one to two months”, a Singapore based trader said.
“Whatever cargoes that has been offered in the past few weeks were from UAE based traders’ stockpiles, albeit at higher prices,” the Singapore-based trader added.
Demand from the United Arab Emirates (UAE) and the surrounding region as a whole has remained firm as prices of Iranian Group I cargoes are generally priced more competitively that cargoes from Europe, the US or southeast Asia, according to a market source.
The ongoing sanctions by the US on Iranian oil products has failed to dampen buying interest as cargoes are often exported out of the UAE, the source said.
“Buyers are price conscious, they will always source for the most competitive price regardless of cargo origin," the market source added.
The tightness in the market will ease and cargo availability may return to normal once production in Iran resumes after the New Year holidays in early April, according to traders.
Offers of Iranian origin cargoes for SN500 grade of base oils into India were heard at $980/tonne (€755/tonne) CFR (cost and freight) but these were deemed unattractive as cargoes that were produced in India were available at a US dollar parity of $940-970 DEL (delivered), sources said.
($1 = €0.77)
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