July 12, 2012 / 2:38 PM / 8 years ago

UPDATE 1-Iran fuel oil exports plummet in June-industry data

* Exports to Asia dive in June

* Fall of 465,000 T in 280-cst cargoes

* Vitol, Syrian state oil firm lifting Iranian fuel oil (Updates with background, details)

By Humeyra Pamuk

DUBAI, July 12 (Reuters) - Iran’s fuel oil exports fell nearly 50 percent from May to June, according to industry sources, adding to declines earlier this year and to the strain on Tehran’s finances as sanctions have hit its oil trade.

Fuel oil exports from the OPEC member, a major supplier to Asia and Middle East, sank to 396,000 tonnes in June from around 777,000 tonnes in May, according to a firm that tracks oil shipments.

Its exports to Asia fell the most in June, down 84 percent from just over half a million tonnes in May to around 80,000 tonnes.

Western sanctions do not specifically ban the purchase of Iran’s fuel oil but instead target the financing and shipping insurance needed to buy and transport Iranian cargoes, creating difficulties for would-be customers that effectively have slashed trade with Iran.

“No one is willing to insure any Iran-related oil cargo,” a Gulf-based trader said. “Plus the trade has to be in any other currency than the dollar.”

The United States has blacklisted some companies due to their business links with Iran, including United Arab Emirates-based Fal Oil and Singapore’s Kuo-Oil, once lifters of Iranian fuel oil.

The U.S. and European sanctions have targeted Iran’s oil trade to pressure Tehran to halt its disputed nuclear programme. They say Iran is trying to build nuclear weapons, while Iran says its nuclear activities are for civilian purposes.

FUEL OIL SEEN FALLING FURTHER

The fall in fuel oil exports to Asia is in sharp contrast to 2011, when East Asia, the world’s biggest market for fuel oil, took in record volumes, averaging 600,000 to 650,000 tonnes per month, of Iranian fuel oil.

The slide in fuel oil sales follows a drop in crude oil exports, which have deprived the Islamic Republic of billions of dollars in revenue. Iran’s crude sales almost halved over the past year to 1.1 million barrels per day as the European Union suspended purchases and Asian countries cut imports.

Traders at oil companies said they expected fuel oil exports to fall further in July.

“We haven’t seen many exports apart from one VLCC from a few months ago,” one Asia-based fuel oil trader said. “It is all happening very much under the radar. We don’t know what ships they use,” he said.

The region typically gets two grades - the National Iranian Oil Co’s (NIOC) straight-run 280-cst, which is mainly used as feedstock in refineries, and the cracked 380-cst, which is used as bunkering fuel.

The fall in June was due to a major fall in the 280-cst cargoes from Bandar Mahshahr port, down 465,000 tonnes from May. Traders estimate that amounts to a loss of around $250 million to $300 million in revenues.

With the fall in fuel oil exports to Asia, Iran had to ship around 240,000 tonnes, more than half of its total in June, to other countries in the Middle East. The remaining 75,000 tonnes in June was shipped to Eastern Mediterranean and North Africa.

More than half of Iran’s June fuel oil exports were lifted by oil trader Vitol. Syrian refiner Sytrol received around 75,000 tonnes, while China’s ZhenRong lifted around 83,000 tonnes, according to the data.

Part of the fall in exports was due to the fact that Iran burned more fuel oil for power generation, traders said.

“They have some problems with their gas fields,” one said. (Editing by Daniel Fineren and Jane Baird)

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