* Iran fuel oil sales worth about $600 mln last month
* Straight-run 280-cst oil sought by blenders, Chinese
* Indirect sales hard to trace back to Iran -ops executive
By Luke Pachymuthu
SINGAPORE, May 2 Iran exported nearly 8.7
million barrels of fuel oil in April, or about 300,000 barrels
per day (bpd), an increase of more than five-fold from a
year-ago, according to traders and data from Thomson Reuters Oil
The April shipments earned Iran around $600 million, the
figures show, despite tough Western sanctions aimed at choking
Iran's flow of petrodollars to force it to halt its nuclear
programme. The sanctions have halved the country's crude exports
but have failed to curb its fuel oil trade.
Iranian marketing officials and middlemen operating mainly
out of the United Arab Emirates have been able to bypass the
sanctions using ship-to-ship (STS) transfers and by blending
fuel oil with other oil in remote ports to mask its origin.
The fuel oil exports were 5-1/2 times greater than shipments
of 240,000 tonnes, or 1.56 million barrels, in April 2012.
Revenue grew from the sales despite deals done at steep
discounts to pre-sanction market levels.
Direct sales agreements between the National Iranian Oil
Company (NIOC) and buyers accounted for around 6 million barrels
of the April export volumes, according to at least three sources
familiar with the country's fuel oil exports.
That is a 130 percent increase from 2.6 million barrels, or
86,666 bpd, in average monthly exports by direct sales in the
"This month NIOC has sold three cargoes directly into China.
The flow is obviously killing us because this is a lucrative
market which everyone is trying to grab a share of," said a
trader in North Asia familiar with Iran's exports to the region.
NIOC's high sulphur, straight-run 280-centistoke (cst) is
popular with small and medium-sized refiners in China because of
its high gasoil yield when it is cracked.
NIOC has sold cargoes of the grade into China at marginal
discounts up to low single-digit premiums to Singapore fuel oil
benchmarks, traders said.
Prior to sanctions 280-cst was sometimes sold at premiums of
as much as $20 to the Singapore 180-cst benchmark.
"At this rate I'm going to have to go into a different
business, because there is no way I can compete with their
prices," the North Asia trader said.
NIOC's 280-cst oil is also popular among blenders because
its low-density makes it an important mixing component for
Western arbitrage fuel oil cargoes, which usually have high
viscosity, trader said.
Most of the Iran's direct sales exports are dispatched from
the country's largest oil export terminal at Kharg Island,
according to sources.
Indirect sales of Iranian fuel oil, or oil sold to private
trading companies based outside Iran, totalled about 2.7 million
barrels in April.
These exports are carried out mostly through STS operations
in international waters using "runners" or smaller tankers,
which are then used to redistribute the oil to buyers from the
"The buyers include the world's biggest trading companies,
international oil majors, and small one-man trading outfits," a
Middle East-based operations executive said. The number of
transactions between the first STS transfer and the final buyer
make it hard to trace the oil, he added.
"The buyer has no issues because his documents are not going
to show the oil came from Iran," he said.
(Reporting by Luke Pachymuthu; Editing by Tom Hogue)