Iran May Be Storing 38 Million Barrels of Oil at Sea

Between 30 and 38 million barrels of Iranian crude may be in floating storage, a reference to oil kept in tankers and not sold, by early May, the International Energy Agency said. Cuts in orders from refiners in India, China, Japan and South Korea and maintenance at some facilities have hurt Iran’s sales.

“Weaker demand for heavier crudes, unattractive price formulas and the threat of new sanctions have combined to reduce buying interest in the country’s heavier, sour crudes,” the IEA said in a report today. Sour grades have a high sulfur content.

The Organization of Petroleum Exporting Countries, which pumps about 40 percent of global supply, cut production targets in Dec. 2008 after crude prices slumped to less than $35 a barrel. Member states have been producing more than their limits this year after crude prices have more than doubled as the global economy began to recover from recession, boosting demand.

Business Week