The world’s largest oil traders have quietly stopped
supplying petrol to
Iran
in a clear sign that the threat of sanctions and
Washington
’s
behind-the-scenes efforts to convince companies not to sell to
Tehran
are paying off.
However, the decision by Vitol, Glencore and Trafigura
is unlikely to cut
Tehran
off completely from the global petrol market as traders said
Iran
’s
long-standing suppliers were being replaced by small Dubai-based and Chinese
companies.
Although
Iran
is one of the world’s biggest oil producers, its refineries are dilapidated and
it suffers from runaway petrol demand because of generous subsidies.
Energy executives said Vitol, Glencore and Trafigura,
which have hitherto sold
Iran
half of its petrol imports of 130,000 barrels a day, stopped supplying
Tehran
because of
mounting political risk. “The political and public relations problems more than
outweigh the business rewards,” said one executive.
The sale of petrol to
Iran
by non-US companies is legal as fuel imports have yet to be included in
sanctions against the country. The companies declined to comment.
Vitol’s decision is particularly important as
the company is by far the world’s largest oil trader. One executive familiar
with
Iran
’s trade said “Vitol consciously decided not to participate in
Iran
’s
tenders” at the start of the year. Trafigura, the Switzerland-based oil and
metals trader, stopped selling to
Iran
about three months ago, an industry executive said. “They have concluded that
there’s too much political and financial risk,” the executive said. Glencore
stopped supply in late 2009, breaking a relationship with
Iran
of more than three decades.
The traders’ decision comes as both
US
houses of Congress have backed legislation to impose unilateral sanctions on
companies that provide
Iran
with petrol as well as on insurers of such shipments, such as Lloyd’s
of London. Supporters of the sanctions describe the petrol imports as “
Iran
’s
economic Achilles heel”.
Oil groups such as
Total of France,
Lukoil
of
Russia
, Petronas of Malaysia and
Royal Dutch Shell also sold petrol to
Iran
last year. Chinese oil traders, including the secretive ZhenHua Oil, began
supplying fuel to
Iran
in 2009 and now provide up to a third of its imports.