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Bandar Abbas, Iran: The hulking tanker Neptune was floating aimlessly this week in the warm waters
The ship's real name was Iran Astaneh, and it was part of a fleet of about 65 Iranian tankers serving as floating storage facilities for Iranian oil, each one given a nautical makeover to conceal its origin and make a buyer easier to find. The Neptune had been floating there for a month, and local fishermen said there were two even larger tankers anchored nearby.
Iran, faced with increasingly stringent economic sanctions imposed by the international community to force it to abandon any ambitions to develop nuclear weapons, has been reluctant to reduce its oil production, fearing that doing so could damage its wells. But Iran has insufficient space to store the crude it cannot sell. So while it furiously works to build storage capacity on shore, it has turned to mothballing at sea.
"We have never seen so many just waiting around," said Rostam, a fisherman and smuggler who regularly works these waters.
After years of defiance and insistence that sanctions were barely being felt at home, Iranians are acknowledging the latest round with growing alarm. President Mahmoud Ahmadinejad said Tuesday that they were "the strongest yet."
International oil experts say Iranian exports have already been cut by at least a quarter since the beginning of the year, costing Iran roughly $10 billion so far in forgone revenues. Many experts say the pain is only beginning, since oil prices have been falling and Iran's sales should drop even more with the European embargo that went into effect on Sunday.
"They are getting squeezed," said Sadad Al Husseini, former executive vice president for exploration and development of Saudi Aramco, the state oil company. "It's too much trouble to buy Iranian oil. Why alienate the United States and Europe? And the rest of OPEC is not very happy with Iran either."
On Wednesday, a Kenyan oil official told Reuters that the country was canceling an agreement to import up to 80,000 barrels of oil a day from Iran after Britain warned Kenya that it could run afoul of the sanctions. Meanwhile, South Korea said its imports of Iranian oil fell by nearly 50 percent in May, compared with April.
The drop in crude sales has hit Tehran with multiple challenges. Besides the financial impact, Iran has to figure out what to do with all the oil it continues to produce. Iran is pumping about 2.8 million barrels a day - already down about one million barrels daily since the start of the year. But it is exporting only an estimated 1.6 to 1.8 million barrels a day.
The unsold crude is being stored in what has been estimated to be two-thirds of the Iranian tanker fleet. Most of the ships are sailing in circles around the Persian Gulf as Iran tries to sell the mostly heavy crude at bargain-basement prices.
International oil experts estimate that Iran is now warehousing as much as 40 million barrels - roughly two weeks of production - on the tankers. An additional 10 million barrels are in storage on shore.
"We are now forced to sell our most valuable export product in secret," said Nader Karimi Joni, an Iranian journalist specializing in oil. "Iran had a great reputation; now we have to falsify bills of lading, hide the oil's origin and store oil on ships."
The subterfuge operates on several levels, but here, on the waters off Bandar Abbas, it is all about the tanker, Neptune. Beneath the fresh black paint, the ship's hulk bore the name in English and Persian of the tanker company, NITC.
The ship, one of Iran's smallest, was built in 2000 in South Korea. It carried no flag, and its home port - Bushehr - had first been changed to Valletta, Malta, which had also been painted over. It now said Funafuti, the capital of the Pacific Ocean island nation of Tuvalu.
To conceal their positions - and perhaps to hide just how many loaded ships are at sea - Iran's oil tankers also frequently turn off their GPS tracking devices, according to IHS Fairplay, a London-based ship tracking data company. It mapped out the last-known destinations of all NITC tankers, including the Iran Astaneh, and concluded that 21 were last seen in the Persian Gulf.
"I hear there are a lot more up north close to the oil terminals," said Rostam, the smuggler, as he pulled his small craft up alongside the tanker.
Smugglers regularly zip across the Strait of Hormuz in small speedboats to the northern tip of Oman, Rostam and others said, picking up boxes of all kinds of black-market goods. Along the way, Rostam said, he sees the physical evidence of growing tension in the narrow waterway where one-fifth of the world's oil must travel to get to market.
"We constantly run into United States Navy," Rostam said. "They only stop us when our boat is filled with people. Not when we are shipping merchandise."
Iran's Revolutionary Guards navy is also present in the waters and has its headquarters in this port city, he said. The Iranian Navy operates mainly speedboats with missile launchers mounted on top, intending to swarm much larger American Navy ships with dozens of such boats in case of a confrontation.
Such conflict has happened before, and a defeat prompted Iran to change its navy's military doctrine. During a one-day conflict in these waters in 1988 between Iran and the United States, one Iranian frigate was sunk, while Iranian forces claimed to have brought down an American helicopter. Some months later, an American Navy ship shot down an Iranian civilian airliner, killing 290 people, an event that Iran commemorated on Monday. The country maintains the plane was deliberately shot down, while the United States says it was an accident.
The prospect of a confrontation now could grow as the pressure builds on Iran while the sanctions, and dropping oil prices, cut deeper into Tehran's financial lifeline.
Oil prices have fallen by nearly 10 percent since the beginning of the year - and roughly 20 percent from their peak in March - because of weakening demand from Europe, the United States and parts of the developing world, as well as increased production from Saudi Arabia, Iraq and Libya. Oil experts estimate that Iran's oil export revenues are down about 35 percent compared with the beginning of the year.
Increasingly, Iran's officials are warning its citizens to prepare for tough times ahead. On Monday, Ali Akbar Salehi, Iran's foreign minister, made comparisons to the eight-year war between Iran and Iraq when he discussed with reporters the mounting pressures on Iran.
Iran's vice president, Mohammad-Reza Rahimi, speaking during a religious conference on Sunday, said his country would never be stopped, and he asked for people's support, state television reported. "Today, we are facing the heaviest of sanctions, and we ask people to help officials in this battle," he said.
Aboard the Neptune, the crew knew what that meant: killing more time baby-sitting for crude at sea. On Sunday, members of the crew trudged out beneath a blazing sun and hauled up the anchor. They knew they were not going anywhere, but they took the opportunity to clean off the rust. Then they shouted to passengers in a skiff below, trying to make a joke.
"Wait five minutes," a sailor said. "When we drop anchor again, you'll get great pictures."
Oil backed up, Iranians put it on idled ships | NDTV.com
The ship's real name was Iran Astaneh, and it was part of a fleet of about 65 Iranian tankers serving as floating storage facilities for Iranian oil, each one given a nautical makeover to conceal its origin and make a buyer easier to find. The Neptune had been floating there for a month, and local fishermen said there were two even larger tankers anchored nearby.
Iran, faced with increasingly stringent economic sanctions imposed by the international community to force it to abandon any ambitions to develop nuclear weapons, has been reluctant to reduce its oil production, fearing that doing so could damage its wells. But Iran has insufficient space to store the crude it cannot sell. So while it furiously works to build storage capacity on shore, it has turned to mothballing at sea.
"We have never seen so many just waiting around," said Rostam, a fisherman and smuggler who regularly works these waters.
After years of defiance and insistence that sanctions were barely being felt at home, Iranians are acknowledging the latest round with growing alarm. President Mahmoud Ahmadinejad said Tuesday that they were "the strongest yet."
International oil experts say Iranian exports have already been cut by at least a quarter since the beginning of the year, costing Iran roughly $10 billion so far in forgone revenues. Many experts say the pain is only beginning, since oil prices have been falling and Iran's sales should drop even more with the European embargo that went into effect on Sunday.
"They are getting squeezed," said Sadad Al Husseini, former executive vice president for exploration and development of Saudi Aramco, the state oil company. "It's too much trouble to buy Iranian oil. Why alienate the United States and Europe? And the rest of OPEC is not very happy with Iran either."
On Wednesday, a Kenyan oil official told Reuters that the country was canceling an agreement to import up to 80,000 barrels of oil a day from Iran after Britain warned Kenya that it could run afoul of the sanctions. Meanwhile, South Korea said its imports of Iranian oil fell by nearly 50 percent in May, compared with April.
The drop in crude sales has hit Tehran with multiple challenges. Besides the financial impact, Iran has to figure out what to do with all the oil it continues to produce. Iran is pumping about 2.8 million barrels a day - already down about one million barrels daily since the start of the year. But it is exporting only an estimated 1.6 to 1.8 million barrels a day.
The unsold crude is being stored in what has been estimated to be two-thirds of the Iranian tanker fleet. Most of the ships are sailing in circles around the Persian Gulf as Iran tries to sell the mostly heavy crude at bargain-basement prices.
International oil experts estimate that Iran is now warehousing as much as 40 million barrels - roughly two weeks of production - on the tankers. An additional 10 million barrels are in storage on shore.
"We are now forced to sell our most valuable export product in secret," said Nader Karimi Joni, an Iranian journalist specializing in oil. "Iran had a great reputation; now we have to falsify bills of lading, hide the oil's origin and store oil on ships."
The subterfuge operates on several levels, but here, on the waters off Bandar Abbas, it is all about the tanker, Neptune. Beneath the fresh black paint, the ship's hulk bore the name in English and Persian of the tanker company, NITC.
The ship, one of Iran's smallest, was built in 2000 in South Korea. It carried no flag, and its home port - Bushehr - had first been changed to Valletta, Malta, which had also been painted over. It now said Funafuti, the capital of the Pacific Ocean island nation of Tuvalu.
To conceal their positions - and perhaps to hide just how many loaded ships are at sea - Iran's oil tankers also frequently turn off their GPS tracking devices, according to IHS Fairplay, a London-based ship tracking data company. It mapped out the last-known destinations of all NITC tankers, including the Iran Astaneh, and concluded that 21 were last seen in the Persian Gulf.
"I hear there are a lot more up north close to the oil terminals," said Rostam, the smuggler, as he pulled his small craft up alongside the tanker.
Smugglers regularly zip across the Strait of Hormuz in small speedboats to the northern tip of Oman, Rostam and others said, picking up boxes of all kinds of black-market goods. Along the way, Rostam said, he sees the physical evidence of growing tension in the narrow waterway where one-fifth of the world's oil must travel to get to market.
"We constantly run into United States Navy," Rostam said. "They only stop us when our boat is filled with people. Not when we are shipping merchandise."
Iran's Revolutionary Guards navy is also present in the waters and has its headquarters in this port city, he said. The Iranian Navy operates mainly speedboats with missile launchers mounted on top, intending to swarm much larger American Navy ships with dozens of such boats in case of a confrontation.
Such conflict has happened before, and a defeat prompted Iran to change its navy's military doctrine. During a one-day conflict in these waters in 1988 between Iran and the United States, one Iranian frigate was sunk, while Iranian forces claimed to have brought down an American helicopter. Some months later, an American Navy ship shot down an Iranian civilian airliner, killing 290 people, an event that Iran commemorated on Monday. The country maintains the plane was deliberately shot down, while the United States says it was an accident.
The prospect of a confrontation now could grow as the pressure builds on Iran while the sanctions, and dropping oil prices, cut deeper into Tehran's financial lifeline.
Oil prices have fallen by nearly 10 percent since the beginning of the year - and roughly 20 percent from their peak in March - because of weakening demand from Europe, the United States and parts of the developing world, as well as increased production from Saudi Arabia, Iraq and Libya. Oil experts estimate that Iran's oil export revenues are down about 35 percent compared with the beginning of the year.
Increasingly, Iran's officials are warning its citizens to prepare for tough times ahead. On Monday, Ali Akbar Salehi, Iran's foreign minister, made comparisons to the eight-year war between Iran and Iraq when he discussed with reporters the mounting pressures on Iran.
Iran's vice president, Mohammad-Reza Rahimi, speaking during a religious conference on Sunday, said his country would never be stopped, and he asked for people's support, state television reported. "Today, we are facing the heaviest of sanctions, and we ask people to help officials in this battle," he said.
Aboard the Neptune, the crew knew what that meant: killing more time baby-sitting for crude at sea. On Sunday, members of the crew trudged out beneath a blazing sun and hauled up the anchor. They knew they were not going anywhere, but they took the opportunity to clean off the rust. Then they shouted to passengers in a skiff below, trying to make a joke.
"Wait five minutes," a sailor said. "When we drop anchor again, you'll get great pictures."
Oil backed up, Iranians put it on idled ships | NDTV.com