Local demand forces Iran to halt oil exports

Iran, a regular exporter of fuel oil was expected to cease spot exports from November through to the end of March next year, as it looks to meet domestic demand for power generation during the winter, industry sources said yesterday.

The National Iranian Oil Company (Nioc), which has been exporting about two to three cargoes of fuel oil since April, will only offer spot cargoes if domestic requirements ease.

"We are very short at the moment, consumption is high and in the winter we will have to watch the demand in the domestic market very carefully," a source familiar with Nioc's fuel oil sales said.

"For the fourth-quarter there will be no spot available, the plan is the same for first-quarter, 2010."

Iran typically exports 280-centistoke (cst) straight-run fuel oil, which is purchased for blending heavier viscosity barrels, traders said.

It is also sometimes used as a refinery feedstock in Southern China.

Nioc last sold a spot cargo of 280-cst at the end of September, early October loading for a premium of about $18 (Dh66.1) to $20 a tonne on a free-on-board (FOB) basis off Bandar Abbas, the source said.

Iran was expected to lower its fuel oil exports in 2010, as domestic consumption for power rises, while production of the heavy oil was expected to drop as more refineries go under upgradation drive in the country.

"It's a global trend, fuel oil will be tight because refineries are getting upgraded and built to maximise high quality fuel such as gasoline, and diesel," an Asian based trader said.

Iran has been slowly working on upgrading its domestic refineries as it looks to increase gasoline production to meet swelling local demand.

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