BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR PRIVACY & COOKIE NOTICE
X


High oil prices as much of a worry as US Iran sanctions: Saras CEO

Rome (Platts)--14 May 2018 238 pm EDT/1838 GMT


Italian refiner Saras said Monday it will continue to buy Iranian crude for now despite US sanctions, but the company's CEO said he expected oil trade with Iran to become "increasingly difficult" and expressed concern on the significant rise in oil prices.

"We find current situation worrying as it affects international commerce, as other sanctions do; though what's key to note is that we worry not about not having access to crude oil, but to the price of crude," Saras' Dario Scaffardi said on an analyst call, adding that "history shows these tensions are not positive for commerce."

Saras, which runs the 300,000 b/d Sarroch refinery and is an active buyer of Iranian oil, said it is flexible in its crude oil imports, but Scaffardi did admit that the rise in oil prices was more of an issue for them rather than sanctions on Iran.

Saras is closely following developments with Iran, Scaffardi said, as these could further affect the supplies it sources.

Article continues below...



Request a free trial of: European MarketscanEuropean Marketscan
European Marketscan

European Marketscan delivers everything you need to gain a full and clear 360 degree view of the European oil products market each business day, including:

  • Benchmark price assessments for refined oil products in key markets
  • Daily reporting of trading activity for major refined products in Europe
  • Gasoline and diesel blending component pricing and analysis
  • Expert analysis and market commentary from our International team of journalists
Request a free trialMore Information


"We are not worried about sourcing crude oil as thanks to our capabilities we are able to source. Price is another matter," he said."Iran, which is one of the main sour crude suppliers of the Mediterranean basis, provide Saras with crude. This could change as Saras will comply with any law or regulation that comes into effect as we have always done."

The refiner saw its crude refinery runs in the first quarter of the year drop 7% to 3.21 million mt (23.4 million barrels) due to a maintenance program.

"Whether the Saudis will pump more to compensate I don't know, though this will have to arise from some sort of international agreement which doesn't seem to be the case at the moment," he added.

Prior to the introduction of the EU's 2012 sanctions against Iran, Saras bought some 10% of its crude from there, and had been buying Iran crudefor some 30 years until that time. It since resumed Iranian crudepurchases when the sanctions were last lifted in January 2016.

International buyers of Iranian oil have until November 4 to wind down contracts before the US reimposes sanctions on the oil, energy, shippingand insurance sectors, according to a US Treasury Department fact sheet.

In practice Europe is expected to continue buying Iranian crude until US sanctions enter into force in November.

These sanctions might affect companies buying Iranian crude that involve significant dollar transactions or US banks or have a sizeable US presence.

Earlier in the week, the CEO of Italy's Eni said Europe should use its diplomatic clout with the US to limit the impact of renewed sanctions against Iran.

Claudio Descalzi indicated he supported moves by some European politicians to persuade the US to soften the impact of President Donald Trump's decision last week to exit the 2016 nuclear deal with Tehran and limit Iran's exports.

International buyers of Iranian oil have until November 4 to wind down contracts before the US reimposes sanctions on the oil, energy, shippingand insurance sectors, according to a US Treasury Department fact sheet.

Europe is an important outlet for the OPEC member, taking around 700,000 b/d, or a third, of Iranian crude exports. The key buyers of Iranian crude in the wider European region are Turkey, France, Italy, Spain andGreece.

The biggest buyer of Iranian oil in the wider European region is Turkey, with sources saying Turkish demand is likely to be strong despite the sanctions due to its close relations with Iran.

--Alina Trabattoni with Eklavya Gupte, eklavya.gupte@spglobal.com

--Edited by Richard Rubin, newsdesk@spglobal.com




Copyright © 2018 S&P Global Platts, a division of S&P Global. All rights reserved.