A new report says Iran has maintained high levels of crude oil production even as it is largely unable to sell the commodity due to stringent Western sanctions. As a result, a fleet of Iranian ships loaded with oil are idling off the country’s coast with nowhere to go.
“We have never seen so many just waiting around,” a fisherman who has seen the stalled vessels offshore, said in a New York Times article.
The European Union imposed an oil embargo and a ban on insurance for tankers carrying Iranian oil that took effect July 1. Analysts say the measures could slash Iran’s foreign sales of oil – its largest source of revenue – by more than half. In the meantime, the U.S. Congress is completing legislation expected to pass this month that would further tighten sanctions on Iran’s oil sector.
Iran, which has foreign currency reserves of $60 billion to $100 billion, stands to lose about $4 billion a month, experts said in a Los Angeles Times article.
“They are getting squeezed,” Sadad Al Husseini, a former executive vice president for exploration and development of Saudi Aramco, the state oil company told The New York Times. “It’s too much trouble to buy Iranian oil. Why alienate the United States and Europe? And the rest of OPEC is not very happy with Iran either.”
Two-thirds of the Iran’s fleet of tanks are storing the unsold oil while the country continues to produce about 2.8 million barrels a day to avoid potential damage to its oil wells infrastructure. Iran has been able to find buyers for slightly more than half of that amount, according to the New York Times report.
Meanwhile, a meeting between Iranian and international experts in Istanbul on Tuesday failed to yield a new agreement on halting Iran’s nuclear enrichment, though a statement said there would be another meeting soon.
Iranian envoys and the P5+1, the six-nation negotiating group that comprises Russia, China, France, the U.K., the United States plus Germany, failed to make progress on the issue in Moscow two weeks ago during the third round of major negotiations since January.