Shipping rates for crude would double in the event Iran is freed from sanctions and manages to increase exports by as much as the nation’s oil ministry predicts, according to Morgan Stanley.
The industry’s biggest tankers will earn as much as $100,000 a day should Iran boost exports by 1 million barrels a day, Morgan Stanley analyst Fotis Giannakoulis said in an e- mailed report on Monday. That’s the size of increase that Oil Minister Bijan Namdar Zanganeh said was possible on March 16. The bank’s own estimate is for shipments to rise by about half that amount if Iran gets a deal, boosting tanker rates by at least 20 percent, he said.
World powers are negotiating with Iran in Lausanne, Switzerland, trying to curtail the country’s nuclear program. Should the it get a deal and ship as much as Zanganeh anticipates, the resulting growth in exports could fill 20 to 30 very large crude carriers, the industry’s biggest type of ship, Giannakoulis said.
“Crude exports could see a further boost if a deal over the Iranian nuclear program were to materialize in the coming weeks,” he said. “Charterers would take into account any deal, as they must charter ships in advance.”
Iran’s crude shipments have averaged about 1.1 million barrels a day since 2012 as sanctions were imposed including a European Union ban on imports of Iranian crude. The Persian Gulf state shipped about 2.4 million barrels a day in 2011, International Energy Agency data show. The six buyers permitted to import Iranian crude under U.S. sanctions are China, Japan, South Korea, Taiwan, India and Turkey.
OPEC Supply
Earnings for VLCCs on the benchmark Middle East-to-east Asia route were $49,516 a day on Monday, according to data from the Baltic Exchange, a London-based publisher of freight rates on more than 50 trade routes. That’s the highest for the time of year since at least 2009.
Increased shipments from the Organization of Petroleum Exporting Countries have caused ship chartering in the Middle East to rise 13 percent from a year ago, Giannakoulis wrote in the report.
OPEC, which pumps 40 percent of the world’s oil, exceeded its production target of 30 million barrels a day for the ninth consecutive month in February, when the group supplied 30.57 barrels a day, according to data compiled by Bloomberg.