A draw down in Iranian exports is far from certain, although the market is being tested to show what the reduction to zero would be. A good place to start is by analysing the exports from Iran and their destinations in 2017, and then looking at expected impacts on ship demand if unilateral sanctions are undertaken by the United States and other select allies. 2017 is a good year to use as a benchmark as there was less opacity around exports, and it helps quantify the baseline level of ton mile demand the country added to the global mix.
During this time NITC vessels accounted for about 25% of the total unique number of large crude tankers (VLCCs, Suezmax, Aframax) exporting Iranian barrels, but accounted for 41% of all journeys. Any view on impact to freight rates must take into account trading limitations that would also be placed on these ships.
Iranian owned tankers accounted for about 2.25 percent of all large crude tanker ton mile demand from the start of 2013 to today, and their market share increased in late 2016 after the initial relaxation of sanctions. There were many other confounding factors impacting the tanker markets during this time period, including jostling on lifting counts to influence oil prices. The overall market correlated with weaker returns while the NITC fleet was on the water.
Two of the recent market jumps in VLCC rates were closely correlated with sharp drawdowns in the number of reported shipments from Iran. VLCC rates are used for illustrative purposes as they tend to set the direction for other large crude tankers in general. Global demand for oil should remain robust in the short term in the event there is a significant price increase. Refiners will continue to lift barrels from other locations as suppliers appear to be (loosely) committed to keeping adequate supply on the market. Iranian exports moving to zero and the removal of Iranian owned ships from service should boost the crude tanker freight markets.
Source:VesselsValue
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