RIYADH: A battle of wits is on. How much is Iran producing and selling is a matter of great conjecture and speculation at the moment, emitting confusing signals.
Washington and its allies insist the embargo is beginning to produce results. It has helped, they say, in mellowing somewhat the Iranian stand on the nuclear issue — the apple of discord — between Washington and Tehran.
Iran has sent conciliatory signals in recent days, as western governments prepare for nuclear talks with Iran, set to begin on May 23. US officials say that building economic pressure raises the chances of a breakthrough in talks.
“They are increasingly isolated, diplomatically, financially and economically,” David Cohen, the US Treasury Department’s undersecretary for terrorism and financial intelligence, said. “I don’t think there is any question that the impact of this pressure played a role in Iran’s decision to come to the table.”
If the Iranian oil sales have been stymied by sanctions or not is of critical importance to the entire posturing.
With debate on the impact of embargo intensifying, Opec interestingly decided, for the first time, to publish two different estimates of its production in its April monthly oil market.
The first estimate is the one it has always used; based on figures compiled by a number of defined ‘secondary sources,’ including Platts, while the second set of numbers, given out by Opec, comprising submissions given directly to Opec by member countries.
And interestingly, both vary significantly. In case of Iran, for example, Opec’s analysis, using secondary data sources, estimate that Iran’s oil production has fallen by 152,000 barrels a day since January to 3.2 million barrels a day in April.
However, in official submissions to Opec, the Iranian output is reported to have gone up by 38,000 barrels a day to 3.8 million barrels a day in April.
The data is thus open to interpretations. Iranian production fell nine per cent in the first four months of this year, pumping 3.2 million bpd last month, down 134,000 bpd from March, dpa reported using the Opec figures.
The Paris-based IEA too reported a fall in Iranian exports. It could be down by as much as one million barrels a day this quarter, it said, adding that Iran’s oil production remained steady at 3.3 million barrels a day in April, but it did not sell 15pc to 25pc of that oil and instead pumped it into floating tanker storage.
However, Tehran Times quoted the Opec report as saying Iran’s oil output in April was 3.758 million bpd, 182,000 more than in 2011, effectively denying that supply has been impacted by sanctions against Tehran. And in order to dodge sanctions or obscure their impact, Iran’s fleet of oil tankers have started to play “hide and seek” by disabling their tracking beacons, the IEA said in its monthly oil market report.
Iran has been routinely switching off satellite tracking systems on its sea-bound oil tankers for more than a month, in order to conceal its actual position.
The unusual tactic began early April and now affects a quarter of Iran’s tanker fleet, the IEA reported.
And additionally, instead of transporting oil to customers around the world, 19 of its 34 ships are thought to be stationary, used only for “floating storage” the Daily Telegraph reported.
The fact that Iran is using valuable tankers for storage suggests that onshore holding facilities at Kharg Island, believed to have a capacity of 23 million barrels, must also be full, some analysts believe.
And in the meantime, Iran complained that the websites of Iranol, the Iranian Oil Ministry, and the National Iranian Oil Company were targeted by hackers late April. Indeed there are reasons for markets to be confused and perplexed. This is a part of the game plan.