SINGAPORE Iran has been forced to deploy more than half its fleet of supertankers to store oil at anchorage in the Gulf as buyers of its crude cut back because of sanctions, two Iran-based shipping sources said.
The sources, who are familiar with operations at Iran's main export terminal Kharg Island in the north of the Gulf, said 14 of National Iranian Tanker Company's (NITC) fleet of 25 very large crude carriers, each loaded with about 2 million barrels of oil, are now at anchor acting as floating storage.
A further five of Iran's nine Suezmax tankers, with capacity of one million barrels, are also parked offshore with oil aboard.
That means that of Iran's 59-million-barrel fleet of VLCCs and Suezmax sized tankers, 33 million barrels of capacity are being used to store crude at sea in the Gulf, or 56 percent of the fleet.
The shipping data suggests Iran's difficulties in selling its oil are getting more acute. With more than half the NITC fleet at anchorage, Iran's capacity to export oil is severely curtailed.
The Iranian shipping sources said that storage tanks on land at Kharg Island, with capacity of some 23 million barrels, are now full.
"The NITC fleet was deployed to Kharg Island to load cargo to prevent shore tank overflows. This has been going on since March," one of the sources, who is familiar with operations at Kharg Island, said.
"The tankers are fully laden," he said.
Industry estimates for the amount of Iranian oil in floating storage from oil companies and tanker tracking consultancies are much lower, in the range 8-16 million barrels, or 4-8 VLCCs.
However, those estimates are based on satellite data using ship tracking systems like the AIS (Automatic Identification System) that use onboard transponders.
Reuters reported on April 13 that most of the NITC tanker fleet had switched off their transponders to conceal shipping movements. Location data for many of the fleet has not been updated for at least three weeks.
"The ships' transponders have been switched off because they don't want to be detected," one of the Iranian shipping sources said.
"They are lying at anchorage. They do not navigate so they don't need the navigation system to be on."
That so many of Iran's tankers are anchored may explain why much of the fleet felt able to switch off its transponders.
Ships are obliged by international law for safety to have a satellite tracking device on board when travelling at sea. However, a ship's master has the discretion to turn off the device with the permission of the vessel's flag state.
Data made available to Reuters shows that at the end of March, 11 vessels were at anchor holding about 18 million barrels in floating storage. Since then the tally has grown by 8 tankers holding another 15 million barrels for a total of 33 million.
Europe's July 1 oil embargo and U.S. and European financial sanctions prompted by Iran's nuclear program have seen Tehran's oil sales drop to most Western destinations and drawn promises from some Asian buyers that they will cut purchases.
China had been expected to take increased volumes of Iranian crude but that has not happened yet.
China halved its Iranian crude imports in March compared to a year earlier and South Korea cut purchases by 40 percent.
Japan has also made steep cuts.
With half of its own fleet being used as floating storage, Iran would need to hire tankers on the open market or have importers hire their own ships to maintain exports.
But traders said it would seem unlikely Iran would deploy its own tankers for floating storage if it were able to sell the crude instead.
"We are not sure if NITC will be requiring more tankers for storage but commercial tanker arrivals coming into load crude have dropped significantly in the past one month because of sanctions issues," said one of the Iranian shipping sources.
Iran last week conceded that exports had fallen slightly to 2.1 million bpd of crude, from 2.2 million at the end of last year.
Independent estimates are that exports fell to about 1.9 million bpd in March and have fallen further in April.
If it cannot find new buyers for its crude Iran's only option other than floating storage would be to curtail oilfield production.
(additional reporting Daniel Fineren, writing Richard Mably; editing by Jason Neely)