Transshipment: untraditional way for Iran to sell oil during sanctions
Tehran, Iran, Dec.17
Transshipment is an untraditional way for Iran to sell its oil during the US sanctions.
Transshipment is the shipment of goods or containers to an intermediate destination, then to yet another destination.
"Basically transshipment is a regular thing in oil sales. This type of delivery can be applied to Iran's traditional customers," Iran's former representative at OPEC, Mohammad Ali Khatibi told Trend.
“Due to limitations for some customers, usually they would not send their ship to Iranian ports, therefore the oil is being transferred from our ships to their ships. This is common way to trade even during a non-sanction period," he added.
"In this model the cost of freight would increase as well, if the oil is delivered to a customer ship on Iranian islands it would not have any cost for the customers, but in transshipment the costs would rise. For instance, when oil delivered in the South China Sea, it means insurance cost would add up to the price. If the freight and insurance is provided by Iran, costumer should pay the costs,” he explained.
“Iran normally sells Free On Board (FOB) oil, which means the customer brings a ship into Iranian ports to receive the oil. Now, if customers say they want cost and freight (C&F) or cost, insurance, freight (CIF), they should pay the standard price which includes additional cost of shipment and insurance. The customer might say he wants to receive the oil in its port, so it should pay the costs,” he added.
"The oil sale should be done according to the framework. If you give in a smallest point in the oil market to a customer, they ask for more, so due to its difficulty normally the exporters refuse to give discount to customers," Khatibi said.
Transshipment is normally fully legal and an everyday part of the world trade. However, it can also be a method used to disguise intent, as is the case with illegal logging, smuggling, or grey-market goods.