Displaced Iran gasoline weighs on ME market

By REEM SHAMSEDDINE | REUTERS 

Published: Jul 29, 2010 21:52 Updated: Jul 29, 2010 21:52

ALKHOBAR: Displaced cargoes from Iran are pressuring gasoline premiums in the Middle East, traders said on Thursday, although summer driving demand held firm. Only three cargoes of gasoline have reached Iran so far in July, according to a shipping document seen by Reuters, much less than the seasonal norm, as tougher US and EU sanctions have made it more difficult to supply gasoline to Iran.

Traders said other cargoes could be on the way and added Iran could have stockpiled gasoline ahead of the sanctions.

While Iran would have to pay up for any future cargoes from those still willing to supply it, others could negotiate lower premiums for any stems reoffered into the market.

“The only impact is that now the market is more supplied because of that, people are paying lower premiums,” one trader said. “Iranians are paying more, but this does not mean others will pay more.”

In Saudi Arabia and the United Arab Emirates, traders said there was firm domestic demand, meaning they required imports to cover the shortfall.

Saudi Arabia has seen demand for gasoline steady, buying 4-6 cargoes a month, traders said. They were awaiting results of an Oman gasoline sell tender, following increased production at Oman’s Sohar refinery, now operating at 95 percent capacity following maintenance earlier this year.

The tender also offers jet fuel and naphtha. “The naphtha market is absolutely at the bottom right now,” said a trader.

Some companies, such as Abu Dhabi National Oil Co. (ADNOC) had started to ask $12-$14 premiums for the next term deal, he said, but buyers were looking for $5 premiums or less.

Saudi Aramco has sold a total of 125,000 tons of spot naphtha for August loading to J P Morgan and Shell in a rare move to ease stockpiles after it failed to sell all its term volumes, traders said on Friday.

Middle East gas oil drew support from news Taiwan’s Formosa Petrochemicals Corp. had had to defer several export cargoes of gasoline and diesel following a fire.

The company exports around 210,000-240,000 tons of gasoline a month, and about 800,000 tons of diesels a month.

Bahrain’s Bapco sold a cargo of 500 ppm for the last decade of August loading ex Bahrain at $3.10 per barrel, a trader said.

He also pegged jet fuel at $1.10 per barrel, compared with $1 per barrel last week.   As premiums firmed, Saudi Aramco has offered its fourth vacuum gas oil (VGO) cargo, for end-August loading, in less than two months, traders said on Monday.

The latest cargo is being offered from a different refinery than the previous three. The 250,000-barrel parcel is for Aug. 18-20 loading from its joint venture 400,000 barrels per day (bpd) Samref plant in Yanbu, on a free-on-board (FOB) basis.

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