Sea Transportation: Iran Barters Oil For Really Big Tankers


August 30, 2013: One way Iran is coping with the severe sanctions imposed last year is to go to the barter system. A major barter partner is China, who needs a lot of oil and produces a lot of goods Iran needs. One category of trade items is large oil tankers. China is a major producer of these huge ships (that can carry over a million barrels of oil). Iran has obtained seven of these huge ships so far this year, giving a fleet of 37 VLCCs (Very Large Crude Carriers).

On average, each of these VLCCs can carry 1.73 million barrels of oil, weigh 200,000-300,000 tons, and cost over $120 million each. These ships tend to last 25-30 years. When at sea a VLCC costs over $10,000 a day to operate, but many Iranian VLCCs have been pressed into service storing oil Iran is pumping but has no customers for because of the sanctions. Stationary, a VLCC still costs several thousand dollars a day to operate.

Before the sanctions Iran was producing about 100 million barrels a month. Now it is less than half that. Shutting off wells is costly and time consuming, so nearly half of Iran’s tankers are used for storing this oil until it can be sold. Most of the Iranian tankers are used to carry oil to the few customers (China, Japan, South Korea, Turkey, and the UAE/United Arab Emirates).

India used to be a customer, but paying for their Iranian oil became an insurmountable problem. Turkey does not get a lot and the major customer is China, which can barter. The sanctions made the usual ship/cargo insurance unavailable to Iran, which is why the Iranian tanker fleet has expanded (to about fifty VLCC and smaller ships). Iran self-insures and gives bargain prices for those willing to make deals.



Article Archive

Sea Transportation: Current 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 1999 



Help Keep Us Soaring

We need your help! Our subscription base has slowly been dwindling. We need your help in reversing that trend. We would like to add 20 new subscribers this month.

Each month we count on your subscriptions or contributions. You can support us in the following ways:

  1. Make sure you spread the word about us. Two ways to do that are to like us on Facebook and follow us on Twitter.
  2. Subscribe to our daily newsletter. We’ll send the news to your email box, and you don’t have to come to the site unless you want to read columns or see photos.
  3. You can contribute to the health of StrategyPage. A contribution is not a donation that you can deduct at tax time, but a form of crowdfunding. We store none of your information when you contribute..
Subscribe   Contribute   Close