Dozens Of Merchant Vessels Stuck Off Iran’s Ports As Payment Snags Bite
Dozens of merchant’s vessels with sugar and grains are reportedly stuck outside ports of Iran following weeks of delays as payment snags disrupt the flows of goods into the country, per shipping data and trade sources.
Food is reportedly exempt from the sanctions of the West on Iran over the nuclear program. Still, the effect of the sanctions on the Iranian financial system has resulted in complex and erratic payment arrangements, especially with international firms.
The most recent payment issues have resulted in vessels being unable to discharge cargoes, with 40 bulk carrier vessels stuck outside the important Iranian ports of Bandar Abbas and Bandar Imam Khomeini, per ship tracking data.
Iran’s Ports and Maritime Organization mentioned in a report sometime in November that 37 vessels loaded with about 2.2 million tons of goods had not been able to unload owing to challenging currency payment problems and documentation at Bandar Imam Khomeini.
Food security is an essential priority for Iran. The need for imports has increased due to a drought that hit domestic food production for two consecutive seasons.
Iran will likely import about 5.5 million tons of wheat in the 2022-2023 seasons (July/June), down from 8.0 million in the earlier season but well above the normal levels, based on the US Department of Agriculture data.
In the earlier five seasons, imports had reportedly averaged 1.1 million tons, per data.
Iran has been rocked by several months of unrest, in which demonstrators have reportedly called for the fall of Tehran’s current ruling theocracy. It has posed one of the most significant challenges to the Shi’ite-led Islamic Republic since the 1979 revolution.
A Western trade source familiar with the issue estimated that cargoes stuck outside ports of Iran would be worth over $1 billion, with charterers of the loads facing delay costs or demurrage.
Broker Paragon Global Markets (PGM) said it was unclear how many vessels may have sugar cargoes on them.
That’s bearish if a big buyer cannot find money, then that could result in a large quantity of sugar striving to find a home, PGM explained via a note.
Iranian sugar imports are expected to total 1.1 million tons in the 2022/2023 season (October/September), down from 1.3 million in the earlier season, per the International Sugar Organization.
References: Economic Times, Aawsat, Zawya