Sanctions stigma proves troubling for shipowners lightering Iranian crude off USGC

The Suez Rajan, carrying Iranian-grade crude oil, is currently at anchor off the US Gulf Coast after the US government seized the 158,573 dwt Suezmax.

The US government apprehended the Suez Rajan, calling the ship to the US Gulf coast on court orders, amid developing tensions between the US and Iran in their current tit-for-tat. Houston Refining, which owns the cargoes, remains uncovered after a full two weeks of looking to employ a crude tanker to lighter the ship's Iranian-grade crude oil.

Despite having multiple waivers in place, and the involvement of the US government, Houston Refining has yet to find a shipowner willing to conduct the lightering operation for the Iranian grade crude oil in question. The Iranian crude barrels were reportedly sold to Houston Refining and are struggling to receive even a single offer from Panamax or Aframax shipowners for the ship-to-ship transfer in the Galveston Offshore Lightering Area for the US government to receive the Iranian crude from the seized Suez Rajan tanker.

Stigma to be carried

"Despite this being taken in by the DOJ and having all the OFAC waivers, the stigma of having touched a sanctioned entity's crude will be carried forever in the eyes of the rest of the world," a shipowner said.

It is common practice for chartering companies to look at the last three to five cargoes a tanker has carried as part of the vetting process, prior to subjecting a ship for employment. Tanker sources said almost all tracking software and registries would not detail the waivers for the US government for the job, only listing employment lightering Iranian crude.

Sources have noted that the deal would be on a "name-your-price" basis, unreflective of market value for typical lightering services, with no indication for the amount of payment required for the service.

Opportunity costs

Typical three-day lightering jobs, basis 500,000 barrels, are at lump sum $700,000, according to Platts data. However, deciding to lighter Iranian crude would come with opportunity costs, such as missing out on other voyages thereafter.

Missing out on earnings on an East Coast Mexico haul or a USGC-UK/Continent voyage would have to be considered if ship operators take the risk.

Within the Americas Aframax segment, time-charter equivalent levels for the 70,000 mt ECMexico-USGC at w215 and 70,000 mt benchmark USGC-UKC at w192.5 are reported around lump sum $62,000 and $100,000, respectively, on a single port-to-port voyage, according to sources. For a short-haul ECMexico-USGC run on Panamaxes, currently valued at w285, sources report time-charter equivalents for the voyage sit around $65,000.