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Iran to Halt Fuel Oil Shipments |
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Thursday, 31 July 2008 |
Rising domestic consumption and lack of gas alternative has
forced Iran to halt shipments of heavy fuel oil to Asia from August, as the
country faces obstacle in developing nuclear replacement for gas and oil.
Iran has been shipping out about 1.2 million tons of the residual fuel monthly
since April.
Building domestic stocks ahead of winter and a heavy fourth-quarter maintenance
season have also made Iran to cut shipments.
"This is true, we will be concentrating on building up stocks for use at our
power stations," a source familiar with the fuel oil export program said.
Iran's decision came on the heels of Saudi Arabia's move to not resume fuel oil
exports after its peak summer demand season, due to persistently strong
requirements from domestic power plants and new secondary refining units.
The moves by the two biggest fuel oil exporters in the Middle East will worsen
the current tight supply in Asia, helping to boost crack levels to around
$13-$14 a barrel below Dubai crude, a seven-month high.
"I'm not surprised if we see the fuel oil cracks flip back into a premium at
some point over the next two, maybe three months," a Singapore-based senior fuel
oil trader said.
Robust economic growth in Middle East oil-producing nations has spurred
industrial demand for utility fuels, as power usage across the Persian Gulf
Cooperation Council (PGCC) grows at an annual rate of around 8 percent.
Gas projects have also failed to keep pace with demand for power generation.
Apart from Qatar, all Persian Gulf states are short of gas.
"Iran relies on gas supplies for its power generation especially during peak
demand periods, and they are stockpiling now so that they won't get into the
situation they did last year," a Singapore-based trader said.
The Islamic Republic was forced to slash fuel oil exports to the Middle East
bunkering hub, Fujairah, by up to 60 percent in the past two winters.
Iran is facing great pressure from the US and its Western allies not to go on
with a nuclear program which Iran says is aimed at generating electricity so
that it can export more of its oil and gas.
Sourc: Al Alam Online
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