Obstacles hamper Iran oil exports to Europe

Iranian oil flows to Europe have begun to pick up from a slow start after sanctions were lifted in January, but trading sources say a lack of access to storage part-owned by Tehran’s Gulf Arab rivals now looms large on a list of obstacles.

With most US sanctions still in place, there is no dollar clearing, no established mechanism for non-dollar sales and banks are reluctant to provide letters of credit to facilitate trade.

A new initiative by international ship insurers has helped, but traders say exports have been hampered by Iran’s unwillingness to sweeten terms for potential European buyers.

Traders said Greece’s Hellenic Petroleum (ELPE), a major buyer of Iranian oil prior to sanctions, has been unable to secure financing for deliveries and has yet to restart purchasing oil.

Several trading sources said ELPE would now rely on Total to ship Iranian oil. ELPE said the company had an agreement with Iran on January 22 for the payment of 2011-12 crude oil purchases that was subject to compliance with international rules and banking regulations, but did not comment on any recent developments.

[Reuters]