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Page added on August 14, 2015
Iran is hiding more oil at sea than we realized
One of the biggest mysteries in the oil market surrounds just how much oil Iran is hoarding at sea.
That’s a key question because Iran’s nuclear deal with the West could lift crippling sanctions, and pave the way for tons of Iranian oil to hit the market. A surge in Iranian exports would only deepen the oil supply glut that has sent prices to fresh six-year lows this week to below $43.
Iran claims it’s not stockpiling oil in tankers in the Persian Gulf, but no one believes it. Up until recently, energy experts thought Iran’s vessels held 30 million to 40 million barrels of oil.
But maritime surveillance firm Windward has harnessed sophisticated technology to determine Iran is actually hoarding 50 million barrels of oil. That’s up nearly 150% from April 2014 when Windward started tracking this closely-watched metric.
Based in Israel, Windward uses Big Data to track oil held on all ship classes and vessels in the Gulf, including those that do not transmit their location.
Iran’s oil is ready to be shipped
The larger estimate of Iran’s floating oil stockpile is more evidence that the world has far more oil than it needs, especially given the slowdown in demand and turbulence in China.
“That means when sanctions are lifted, there is going to be a flood of crude hitting the market because boy could they use the money,” said Tom Kloza, chief oil analyst at the Oil Price Information Service.
It’s important to remember the oil hiding at sea is ready to be shipped to a buyer — likely in Asia — at a moment’s notice. It’s already been pumped out of the ground, cleaned up and processed.
“Iran has been trying to downplay what they have in floating storage because they don’t want those figures to spook the market,” said Tamar Essner, an energy analyst at Nasdaq Advisory Services.
Nuclear deal holds key to future of Iran and its oil
But first Iran needs to comply with the nuclear deal that still needs to be ratified by Congress. The landmark pact faces deep skepticism in Congress, but lawmakers may not have enough votes to override a promised veto by President Obama.
If the sanctions are lifted, Iran will be able to put an additional 375,000 to 500,000 barrels of crude on the market by mid-2016, according to RBC Capital Markets.
“Iran is our turnaround story of the year as it is poised to emerge from decades of economic and international isolation,” Helima Croft, head of commodity strategy at RBC, wrote in a research report. “Unlike for most OPEC countries, the future is looking brighter for Iran.”
Guesstimates on Iran’s oil are rising
There remains confusion over Iran’s oil stockpiles.
While Windward’s surveillance has indicated the huge stockpiles of oil that Iran is hiding at sea since early June, other forecasters have estimated a lower amount. Now they are ratcheting up those guesses. Platts said Iran is storing as many as 53 million barrels of oil and condensate at sea, up from a previous estimate of 40 million to 42 million.
That includes one tanker operated by the state-owned oil company that reappeared in the Iranian port of Assaluyeh after having its transmitter switched off since September, Platts said. The firm also said three other tankers “remain invisible” but are likely attached to the group.
Because no one trusts official numbers
The debate over how much oil Iran is stockpiling highlights a common problem in the oil market: No one trusts the data. Much of the time the official statistics are self-reported by countries that have an incentive to fudge the numbers.
“Everywhere we touch, we see that official numbers are very different from real numbers, either up or down. Nobody knows what goes where and how much,” Windward CEO Ami Daniel told CNNMoney.
Windward’s maritime surveillance stats are exclusively used by foreign intelligence services searching for terrorists and contraband. However, now hedge funds and Wall Street banks, always hungry for a trading advantage, have been in talks with Windward over providing access to its platform.
“There’s no real clarity in international oil data. It’s got the precision of cutting your hair with a chain saw,” said Kloza.
17 Comments on "Iran is hiding more oil at sea than we realized"
rockman on Fri, 14th Aug 2015 6:26 am
Wow! 50 million bbbls. That’s almost 2% of the world’s oil consumption in a month. look out world…here comes the “oil flood”. For a dew weeks anyway. LOL.
Banjo on Fri, 14th Aug 2015 7:03 am
Iran has half a days oil consumption stored at sea. OMG look out.
BobInget on Fri, 14th Aug 2015 9:39 am
IN the first instance, have you noticed an increase in purposefully bearish articles appearing lately? Ask yourself, what other reason does this propaganda piece serve?
Secondly, the article hardly mentions the crude in questions viscosity. My reports indicate most is heavy harder to refine crude.
Thirdly, vessels can be counted by drone aircraft. At any one time the US has thousands of drones in the air. Most are observational.
‘big powers’ all have spy satellites.
I’ll bet most storage by Iran and others is happening in older, outlawed, single hulled vessels incapable of greater then a million barrels capacity. (often less) Or, land based tanks and old mining operations.
Oil prices are leveling out between $42 and $45.
This is roughly a 50% off fire sale.
Step right up ladies, when this stock is gone, it’s gone!
IOW’s If Iran could have sold this crude no one really wants, it would have.
penury on Fri, 14th Aug 2015 10:50 am
The only purpose of articles similar to this pro or con is to cause price rise or fall to enrich someone who has the opposite side. If anyone knew the truth, do you think they would tell you?
Plantagenet on Fri, 14th Aug 2015 11:22 am
I’m really amazed that people at this site imagine that the world will stop consuming all other oil, and just switch to consuming Iran’s oil for a couple of days to use up the surplus.
Sorry—it doesn’t work like that.
The global oil glut is caused by a small daily surplus in production over consumption on a GLOBAL basis. Every producing field in the world is affected by the surplus, as it drives the price of all oil lower. Dumping another 50+ million bbls of Iranian oil onto the surplus will just make the oil glut worse—the glut will go on longer and the price collapse of oil will be more severe then it otherwise would’ve been.
CHEERS!
Nony on Fri, 14th Aug 2015 1:35 pm
Was another story saying some of that oil was pretty badly off spec. Much worse than typical Basra light. Will sell at a discount, only.
Apneaman on Fri, 14th Aug 2015 1:47 pm
Plant what is really amazing is how you continue to make up what everyone believes or says then argue it away. Do you have a quote from a commenter resembling anything like “imagine that the world will stop consuming all other oil, and just switch to consuming Iran’s oil for a couple of days to use up the surplus.”? I don’t see one or anything even remotely like it. Claiming people are saying things when they are not saying them is called lying plant. Your a dirty little cock sucking liar plant. You do it every single day on this site. It’s why you are despised.
BC on Fri, 14th Aug 2015 2:27 pm
The rumor is that Iran has Obummer’s original birth certificate from Kenya, which the Iranian leadership used to blackmail Obummer into a nuke deal.
The Iranians bought it from The Donald who couldn’t find anyone else to sell it to except “The Onion”, but they didn’t have the cash.
Or at least that’s what The Donald told me the other day. 😀
http://www.eia.gov/beta/international/analysis.cfm?iso=IRN
In the meantime, bring on that sweet Persian stuff!
http://www.bloomberg.com/news/articles/2015-07-05/russia-seen-as-biggest-oil-market-loser-when-iran-comes-back
Vlad the Terrible must be pi$$ed.
idontknowmyself on Fri, 14th Aug 2015 3:22 pm
I see everywhere a lot of discussion about the price oil, volume of oil produced but very few discussion about the quality of oil and the actual chemical composition of oil. For what we know we might now be stuck with oil that is barely useful and cannot be process be refinery.
That will explain to me why I Quebec I pay 1.26 $/liter when oil is at 42$ and gasoline CME future is at 1.68$. Here we did not benefit from a lower oil price and none in media in Canada has a valid explanation.
Without adequate detail of the quality of oil, we are missing an important piece of data.
Jimmy on Fri, 14th Aug 2015 3:44 pm
I’ve read several articles discussing the fact that most of what is being stored at sea is condensate. There is no embargo on condensate. Iran is free to sell it. So if the condensate can be sold but isn’t being sold it’s possibly because it’s high sulfur and hard to sell at the moment. It is not hard to dig up various reports that the ‘oil’ being stored at sea on tankers is not oil. As usual CNN can’t do research. And by research I mean Google it.
http://shipandbunker.com/news/world/235078-iran-officials-seek-to-dispel-rumours-of-crude-floating-storage
The news websites are more interested in ‘click bait’ to generate traffic to substantiate advertising premiums. The news websites are not interested in informing you. They just want you to click on their page.
Jimmy on Fri, 14th Aug 2015 3:45 pm
http://www.cnbc.com/2015/07/29/reuters-america-poor-margins-plant-outage-make-iran-condensate-a-hard-sell-in-china.html
Jimmy on Fri, 14th Aug 2015 3:50 pm
http://www.nytimes.com/2014/08/13/business/energy-environment/with-a-natural-gas-byproduct-iran-sidesteps-oil-sanctions.html?_r=0
Boat on Fri, 14th Aug 2015 6:09 pm
idontknowmyself,
Tar sand and is expensive to extract, transport and refine. That’s why it sells at a discounted price and you pay more at the pump.
Not sure of the impact but your oil sands has been bought mainly by foreign nations.
Makati1 on Fri, 14th Aug 2015 11:04 pm
oil, shmoil … so what? That will cover the oil changes on the world’s vehicles for a year, or power the US military for two years, maybe.
If there were not contrived ‘problems’ in the world to sell newspapers and scare the sheeple, we could actually have peace and low resource consumption. Maybe the human species would not go extinct by 2100. But that too is a dream for the unicorn huggers.
MrNoItAll on Sat, 15th Aug 2015 1:44 am
Calling BC! I read over on Gail’s blog a comment by you that states you are living in the PacNW and highly “up” on permaculture. That would fit my description also. I’m putting permaculture into action in a major way. IMO, you would be a highly interesting person to meet, if that were possible. I live SW of Portland about 45 minutes to an hour, depending on time of day and traffic. Any chance we could decide on a Starbucks to meet at and get acquainted? I’ll let you do all the talking…
Davy on Sat, 15th Aug 2015 4:53 am
MR, how are the bees? Mine are doing great. I am planning on another hive.
MrNoItAll on Sat, 15th Aug 2015 9:49 am
Hi Davy. My two hives are doing great. I have two completely full honey supers on my nuc hive, and one partially full super on the package hive. I have all the equipment needed to harvest the honey including a stainless steel honey extractor drum — the centrifugal type, manual hand crank. Next weekend is the when I harvest. I didn’t have a problem with mites at all. So, all in all, not bad! I guesstimate that I’ll get 5 – 6 gallons of honey, which would be very good for the first year. How about you? Are you getting ready to harvest honey?
It’s too bad I can’t post from work anymore, but I understand the security concerns so I just have to resign myself to reading the articles and the comments without being able to jump in with my two cents worth.
Amazing things are happening these days. How it all still holds together is a wonder to behold. Keep on posting dude. I’m reading.
Today I am reinforcing my 2000 gallon rain capture water tank with concrete — fun project (not). It started bulging a little earlier this year when it got to 3/4 full so I couldn’t fill it up all the way. Totally unsatisfactory, so I’m going to make it rock solid — concrete solid actually — no more bulging problem. I have a sump pump in it that works great for sucking the water out. Next project is install irrigation system. Work work work.
Have a great weekend. Time for me to get to work.