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Iran faces mounting difficulties selling its crude oil with tighter sanctions depriving the country of essential shipping and banking services.

Tehran’s problems have worsened after the US and the European Union imposed their own wide-ranging sanctions in July, going far beyond the restrictions contained in earlier UN resolutions. Although the measures, implemented because of Tehran’s nuclear ambitions, did not focus on the oil exports that drive Iran’s economy, traders said they were having an effect.

Iran is the world’s fourth-largest oil exporter, with Japan, China, India and South Korea its largest clients. Italy and Spain are the top European buyers. The US has not bought crude oil from Tehran since the Islamic revolution of 1979.

The difficulties have yet to cause a fall in Iran’s oil exports but traders warn of a reduction in the next few months if the problems are not solved.

The International Energy Agency, the western countries’ oil watchdog, said last week that Iran might have to resort to storing oil at sea in tankers “as new sanctions have the unintended consequence of squeezing crude buyers”.

Traders and oil company officials said European and Middle Eastern banks have all but stopped issuing letters of credit – an instrument used in trade – with Iranian financial institutions. This makes it very difficult to transact payments for oil sales. Shipping companies are also refusing to send tankers to Iranian... >>>