Turkey-Iran gasoline sales dive as sanctions bite

ISTANBUL - (Reuters) - Turkey's gasoline sales to Iran fell by 73 percent in July as U.S.-led sanctions came into force, data from the Istanbul Exporters Association of Chemical Materials showed on Tuesday.

Sales of $25.55 million recorded by the association were down sharply on the $93.45 million sold in June and represent the equivalent of just one cargo of the motor fuel, according to Reuters calculations.

The steep month-on-month decline coincided with the introduction of U.S. and European Union sanctions that aim to squeeze Iran's fuel imports and increase its international isolation over its nuclear programme.

The West suspects Iran of attempting to build nuclear weapons, but Tehran says its development of nuclear technology is for peaceful purposes.

Iran has turned to Turkey and China for gasoline imports after many of its traditional suppliers in Europe and the Middle East were frightened off by U.S. sanctions, though the exporters' July data suggests Turkish traders have not been immune.

Turkey's gasoline exports to Iran were estimated at nearly 30,000 tonnes, based on a premium of 25 percent above July's average spot price of gasoline in the Mediterranean of $685 per tonne.

Turkish government data showed Iran bought 138,673 tonnes of gasoline at a 25 percent premium from Turkey in June.

SANCTIONS BITE

At least one tanker of gasoline meant for Iran was prevented from sailing from Turkey in July, trade and shipping sources said.

Ship owners are concerned about shipping to Iran after Lloyd's of London said it would not insure or reinsure petroleum shipments going to the Islamic Republic.

According to figures from the Turkish government and Iranian Oil Ministry, Turkey's gasoline exports to Iran in June amounted to roughly 10 percent of the Islamic Republic's gasoline consumption.

Based on the numbers from the Turkish export group, Turkey supplied just 2.5 percent of Iran's total gasoline needs in July. A Turkish ship was among only three gasoline cargoes that reached Iran by sea, a source said last month.

Despite being the world's fifth-largest crude exporter, Iran has to import around 40 percent of its gasoline needs because it does not have enough domestic refining capacity to meet demand.

Ties between Turkey and Iran have strengthened recently, and Turkey, along with Brazil, pulled together a last minute uranium-swap deal in June that was aimed at quelling fears over Tehran's nuclear ambitions.

Western powers responded cooly to the deal and sanctions were imposed the next month.