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Published:May 23rd, 2008 06:23 EST
Iran Storing Oil in Offshore Tankers

Iran Storing Oil in Offshore Tankers

By Daniel Mabee

According to PetroLogics Ltd., a company that tracks oil-carrying vessels, Iran is now storing crude oil in 20 tankers in the Persian Gulf; this is up from an estimate of ten earlier this month. These tankers are capable of holding up to 40 million barrels of oil, or approximately ten days` worth of production.  According to Alaric Nightingale of Bloomberg.com, Iran is leasing the tankers from a variety of international suppliers.

The majority of oil produced by Iran is heavy and high in sulphur, and several of the refineries capable of processing it have recently closed for repairs. Because heavier oils are incapable of yielding more valuable products such as gasoline, they are not in particularly high demand right now. As a result, Iran is experiencing an excess in oil stores.

Iran`s move from storing oil in state-owned facilities to leased tankers has had a definite effect on the international oil economy. According to Nightingale, the cost of leasing tankers tripled in the period between April 8 and May 2. Additionally, the number of available tankers fell from from 59 to 21 during the same period, according to the Turksih Daily News.

There has been speculation that this is an attempt by Iran to manipulate the global oil market, raising prices in spite of diminishing demands.