Vitol: ‘Business as normal’ with Iran
The world’s largest independent oil trader Vitol Group says it’s "business as normal" with Iran after the end of economic sanctions on the country.
Chief Executive Officer Ian Taylor said Vitol has already bought oil from the country which has been ramping up production since last month in a bid to claw back its global market share.
“We’ve bought some, yes we have,” he told Bloomberg Monday in an interview at the company’s London headquarters.
“We’ve bought a bit of everything really. Bit of products, bit of condensate. It’s very much business as normal,” Taylor added.
He said trade arrangements with Iran, either legally or logistically, are still a bit of an issue because of financing problems but not “specially” difficult.
“Obviously, we like everybody else, did some preparatory work. It was clear that it was coming.
“We also talked to them about what would happen once it did come. So, people are relatively ready,” he said.
Taylor, however admitted that getting insurance coverage for Iranian shipments are still difficult but possible.
“Organizing financial flows and insurance in shipping is not easy; I accept that it’s not easy, but it can be done.”
Iran’s immediate plan for return to the market is to pump 500,000 more barrels per day but Taylor said he thought it would take some time because of “some inevitable teething problems with things like banks and insurance.”
The increase in output “obviously does add to the supply weight and probably will (do so) over time, but the market will deal with that, I think,” he added.
Taylor said he thought Iran’s production would increase by 450,000 bpd by the middle of the year and 600,000-700,000 bpd by the year-end.
“I think a lot depends whether the Iranians are able to get everything else that goes with coming back smoothly, I mean financing particularly. They obviously do look for cash and prepayments," he said.
"I think a lot more will depend on whether all the money that has been owed flows back to get it reinvested to get some of these wells going again,” Taylor added.
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