Saudi Arabia has raised its output to make up for Libyan losses—and Iran has told the Saudis they shouldn’t be doing that. Iran clearly has a self-interest there.
Iranian Deputy Oil Minister Ahmad Ghalebani said Friday, “Demand for Iran’s oil has increased.”
The total amount of loss from the Libyan disorder is not clear. Estimates range from as low as 500,000 barrels day to as much as 1.2 million barrels.
According to Platt’s, a respected industry newsletter, Iran had 20 million to 25 million barrels of unsold crude in storage in tankers anchored in the Persian Gulf when the Libyan uprising began.
Industry sources say Iran has had trouble selling all its daily production because of the new European banking sanctions. They do not block crude oil sales, but they make sales more difficult and have prompted some buyers to move elsewhere. Iran, however, has insisted it is having no problem selling oil.
There is imprecision on how much Iranian crude is in storage since Iran is not helping anyone ferret out the facts. Platt’s found one source that estimated the storage at almost 40 million barrels, saying about 70 percent of Iran’s state-owned fleet of very large crude carriers (VLCCs) was tied up storing crude.
Iran’s production is now about 3.7 million barrels a day with sales averaging 2.3 million barrels a day last year. So, Iran is still selling most of its production. At the high-end estimate of 40 million barrels in storage, that would be the equivalent of about 17 days of exports unsold.
Since the outbreak of rebellion in Libya, the price of oil has surged about $10 a barrel over two weeks. The price of an OPEC barrel Monday was $108.50.