Iran has been forced to store some 40 million barrels of oil that "that no one is willing to buy" because of a crippling embargo on a fleet of about 65 tankers "floating aimlessly" in the Persian Gulf, The New York Times reported Wednesday.
The newspaper quoted international oil experts as saying that Iranian exports have already been reduced by at least 25% since the beginning of the year, costing Iran roughly $10 billion so far in forgone revenues.
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But according to the NYT report, many experts claim the pain is only beginning, since oil prices have been falling and Iran’s sales should drop even more with the European embargo that went into effect on Sunday.
Sadad Al Husseini, former executive vice president for exploration and development of Saudi Aramco told NYT, “They are getting squeezed. 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.”
The embargo is aimed at forcing the Islamic Republic to abandon any ambitions to develop nuclear weapons. Despite the harsh economic sanctions, NYT reported, Iran has been reluctant to reduce its oil production, fearing that doing so could damage its wells. However, Iran has insufficient space to store the crude it cannot sell.
Experts estimate that in addition to the millions of oil barrels stored on the "floating storage facilities," another 10 million oil barrels are being stored on land.
We have never seen so many just waiting around,” Rostam, a fisherman and smuggler who regularly works the waters of the Persian Gulf was quoted as saying.
Mahmoud Bahmani, the governor of the Central Bank of Iran, recently said that Iran would take action against the sanctions. "We have not remained passive. For confronting the sanctions, we have plans in progress," he said.
Bahmani said his country’s $150 billion in foreign exchange reserves would provide Iran with the liquidity to pay for its imports.
The NYT article also mentioned an Iranian tanker which had been floating in the Persian Gulf's waters for about a month under a false name – Neptune – in hopes of finding a buyer for the oil it is carrying.
According to the report, the ship’s real name was Iran Astaneh, and it was part of the fleet of Iranian tankers that were given a "nautical makeover to conceal their origin and make a buyer easier to find."
"The Neptune carried no flag, and its home port — Bushehr — had first been changed to Valletta, Malta, which had also been painted over. It now said Funafuti, the capital of the Pacific Ocean island nation of Tuvalu," according to the report.
IHS Fairplay, a London-based ship tracking data company told NYT that in order to conceal their positions — and perhaps to hide just how many loaded ships are at sea — Iran’s oil tankers also frequently turn off their GPS tracking devices.