As traders speculate over what type of oil is being kept by Iran in floating storage, two Iranian oil officials said on Thursday that the oil was condensate and fuel oil.
The millions of barrels on ships could be delivered quickly to Iran's customers once sanctions are lifted and some traders believe a substantial part is crude, making them concerned about its impact on a global market already suffering a supply glut.
"There is no crude oil in our floating storage, only condensate and fuel oil," said one of the officials, who declined to be identified due to company policy, Reuters reported. Another official also said no crude was being stored.
World powers and Iran reached a landmark deal last week, paving the way for sanctions on Iranian oil exports to be lifted in exchange for curbs on its nuclear program.
Brent crude has fallen about 4% since the deal on concerns of the impact of a prompt release of the estimated 40 to 50 million barrels of Iranian crude and condensate from floating storage.
"Iran oil storage concerns are likely overblown," Morgan Stanley analysts led by Adam Longson said in a note. "Industry sources suggest that a large portion of the Iranian crude stored on floating tankers is condensate."
Iran sells most of its fuel oil from storage tanks in Fujairah, traders said, adding that they do not see an incentive for the producer to store the product.
Asian trade sources have said that most of the oil held in Iran's floating storage, or about 30 million barrels, was condensate, and the rest crude oil.
Iran's stockpile of the ultra light oil is building up each month as Dragon Aromatics, the biggest buyer of South Pars condensate in China, has been shut since April after a fire.
The Chinese petrochemical producer used to buy 2 million barrels of South Pars condensate, out of the 9 million barrels Iran produces each month.
