Bloomberg News

Iran Seeks to Bypass Oil Curbs Using Local Fuel Exporters

July 08, 2012

An association of Iranian oil-product exporters will help the government bypass European Union sanctions and ship as much as 500,000 barrels a day, state-run Mehr news agency reported.

Iran’s central bank and Oil Ministry signed an agreement with the Iranian Oil, Gas & Petrochemical Products Exporters’ Association, said Hassan Khosrojerdi, the head of the exporters’ group, Mehr reported yesterday. Khosrojerdi said the arrangement would enable Iran to sell crude to Europe, though he gave no details about how such sales would occur under the July 1 EU embargo.

Officials will sign a contract this week for the group’s first shipment, he said, according to Mehr. The exporters have reached an agreement to supply some crude to privately owned European refineries, Khosrojerdi said, without identifying the buyers. Some “minor” discounts may be given because of the international restrictions, he said.

The Tehran-based exporters’ association has 214 member companies, according to its website.

The EU ban on Iranian oil builds on earlier U.S. and United Nations measures limiting trade and financial transactions with the Persian Gulf country. The measures attempt to force Iranian officials to curb the country’s nuclear program, which the U.S. says conceals the development of weapons. Iran rejects the allegation and says its program is civilian.

Economic Effects

Since the energy measures came into effect this month, top Iranian officials have started acknowledging their effects on the economy.

The head of Iran’s executive, legislative, and judicial branches held a special meeting yesterday to discuss ways to counter Western-led sanctions against Iran, the state-run Mehr news agency said in a separate report.

During the meeting, President Mahmoud Ahmadinejad, Parliamentary Speaker Ali Larijani, and Judiciary Chief Sadegh Larijani emphasized the need for cooperation in fighting sanctions, Mehr said.

Ahmadinejad and his cabinet also briefed the country’s Expediency Council, which has the final say in legislative disputes, on Iran’s economic situation and measures to neutralize sanctions’ effects, according to the report published late yesterday.

Iran has developed back-up plans for crude-tanker insurance, according to a separate report by the state-run Fars news agency.

Mohammad-Reza Mohamadi-Banayi, managing director of the Kish Protection & Indemnity Club, said Iran’s oil tankers are covered by local insurers and an additional 13 tankers will be insured by his organization, according to the report today.

To contact the reporter on this story: Ladane Nasseri in Dubai at lnasseri@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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