European refineries have started reducing swap purchases of oil from Iran on the threshold of the EU meeting to discuss an oil embargo against Iran on January 23, Financial Times reports.
Traditionally, refineries purchase two thirds of oil directly and the rest through swap deals. The European Union plans to impose an embargo against Tehran. Refineries may call this a force majeure and avoid paying penalties for cancelling long-term contracts.
Iran is being forced to send its oil to naval reservoirs. Its oil stockpiles increased from 28 million barrels in late November to 32.5 million barrels.
Iran is a world oil exporter, supplying 2.2 million barrels of oil daily to Asia. The European Union purchases an average of 450,000 barrels of Iranian oil daily.
US pressure against Iran provoked the Islamic Republic to threaten to block the Hormuz Strait, a naval route for a third of world oil transport. Oil prices increased to $110 per barrel. Shell is the largest European oil purchaser, followed by Total (France), Repsol YPF and Cepsa (Spain), ENI, Saras and ERG (Italy) and Hellenic (Greece), Interfax reports.
