That’s because the Greek economy is in such turmoil right now that no one wants to loan the Greeks money or handle their transactions. That makes Iran, a fellow outcast in the financial world, downright attractive to Greece.
Reuters reported this week that Greece is relying on Iran for most of its oil as traders pull the plug on supplies and banks refuse to provide financing for fear that Athens will default on its debt.
The near paralysis of oil dealings with Greece, which has four refineries, shows how trade in Europe could stall due to a breakdown in trust caused by the euro zone debt crisis, which is threatening to spread to further countries.
A trader with a major international oil company told Reuters, “Companies like us cannot deal with them [Greece]. There is too much risk.”
A second trader said, “Our finance department just refuses to deal with them. Not that they didn’t pay. It is just a precaution.”
And a third said, “We couldn’t find any bank willing to finance us. No bank wants to finance a deal for them [Greece]. We missed some good opportunities there.”
More than two dozen European traders contacted by Reuters at oil majors and trading houses said the lack of bank financing has forced Greece to stop purchasing crude from Russia, Azerbaijan and Kazakhstan in recent months.
Greece, with no domestic production, relies on oil imports and in 2010 imported 46 percent of its crude from Russia and 16 percent from Iran. Saudi Arabia and Kazakhstan provided 10 percent each, Libya 9 percent and Iraq 7 percent, according to data from the European Union. In recent months, the Greeks gave shifted entirely to Iran.
Shipping data obtained by Reuters showed four cargoes of crude from the Middle East outlet of Sidi Kerir on the Egyptian Mediterranean to Greece in September. Three more sailed in October. Traders said all carried Iranian heavy crude and more was scheduled for November.
“Iran is the only one who might be working on an ‘open credit’ basis right now, given its own difficulty in selling crude,” one trader said.
Another said, “They [Greek refiners] are really making no secret when you speak to them and say they are surviving on Iranian stuff because others will simply not sell to them in the current environment.”
Greece’s four refineries, belonging to Hellenic Petroleum and Motor Oil Hellas, together can process around 400,000 barrels per day. That figure has fallen to around 330,000 bpd in recent months due to maintenances and upgrades.
Greek sales are not solving all of Iran’s marketing problems, however. Shipping sources said limited interest in Iranian crude, even though it is cheaper than competing Russian grades, has prompted Iran to continue storing crude in the Red Sea, to make it available for swift delivery.
The rest of the oil industry drastically cut crude storage last year after forward prices for crude made such operations losses.
Iran, however, is storing crude in four very large crude carriers (VLCCs) in the Red Sea, Reuters said.
