Palm oil traders in Southeast Asia, which supplies 90 per cent of the vegetable oil globally, stopped taking Iranian letters of credit late last year ahead of fresh US and European sanctions at the start of 2012.
The halt in palm oil supplies comes on top of payment problems for Indian rice and European grain to Iran, showing that sanctions are starting to impact on the country’s supply of staple food.
Indonesia supplies around 50,000 tonnes a month, or slightly more than half of Iran’s needs, said the Singaporean traders, who declined to be named due to the sensitivity of the issue. Most of Indonesia’s palm oil deals are done in Singapore, a trading hub for the region.
“I can confirm that Singaporean firms have stopped. We don’t want to go anywhere near Iran at this moment, it is too risky,” said a trader with a listed Singaporean firm that ships Indonesian palm oil cargoes to the Middle East and Iran.
Malaysian palm oil exporters have also stopped supplying Iran with most of the 30,000 tonnes of the food staple the Middle Eastern country typically buys from the country each month, traders said yesterday.
A trading source from Saudi Arabia whose firm runs a 16,000 tonne a year refinery in Iran said the country’s edible oil refineries were barely operating.
“My company has a refinery in Iran and we cannot really source much palm oil these days, be it from Indonesia or Malaysia,” said the Saudi Arabian trader, who declined to be named as he is not authorised to speak to the media.
“It is really hurting our business. We keep asking for supply but no one is willing to give.” – Reuters
