Iran seen keeping up fuel imports despite rationing

By Ikuko Kao

LONDON (Reuters) - Oil traders see no signs that Iran will cut its heavy and costly imports of gasoline despite signals that it will start rationing for motorists next week.

The world's fourth biggest crude exporter lacks enough refining capacity to meet its voracious domestic demand and must import about 40 percent of its fuel needs.

This could make it vulnerable to sanctions in the dispute over its nuclear program, which Tehran says is peaceful but Washington suspects is designed to develop weapons.

The United States, leading efforts to isolate the country, has said gasoline imports of some 210,000 barrels per day are a point of leverage.

But oil market players said there were no signals Tehran was slowing down its purchases.

"So far I don't see Iran cutting imports," one trader said.

Iran also has strong financial reasons to act. Oil officials have said the country will exhaust its $2.5 billion budget for gasoline imports by August, more than seven months early, if the consumption continues unchecked.

The head of parliament's energy commission, Kamal Daneshyar, was quoted by a newspaper on Monday as saying three months of rationing will begin next week.

But the companies that supply up to 25 cargoes a month of fuel doubt the Islamic Republic will curb its imports much.

"Rationing will happen, but it will make a very little reduction," an industry source said, adding that he saw imports for June and July of up to 750,000 metric tons a month.

Typically, oil products buyers notify sellers of their requirements weeks ahead of delivery. The Islamic Republic imports much of its gasoline from India, the Netherlands, France and the United Arab Emirates.

Market sources said international trading house Vitol accounts for as much as 60 percent of Iran's imports.

Vitol could not be reached to comment.

An Iranian oil official said last month that purchases of gasoline would gradually decrease by about 30 percent once rationing got under way.

Iran's government has to tread carefully as cheap fuel is prized inside the country. Tehran raised the pump price by 25 percent to 1,000 rials (11 U.S. cents) per liter in May, but it is still among the lowest in the world due to the subsidies.