Vitol and NIOC pre-empt Trump with $1bn pre-finance Iranian oil deal

06/01/2017

Vitol logoNIOC logoVitol, the world’s largest oil trader, has agreed to provide the National Iranian Oil Company (NIOC) with the euro equivalent of $1bn in exchange for a share in future oil product exports from Iran, it was being reported this week, in the first pre-finance deal to be signed between the Islamic Republic and a trading house since sanctions were lifted early last year.
The deal comes hard on the heels of Tehran’s announcement that it had selected 29 foreign companies to bid in forthcoming oil and gas tenders – but it also coincides with BP’s decision to step back from the Iranian market until incoming US President’s intentions towards Iran became clear.
In January 2015, Trump described President Barack Obama’s nuclear deal with Iran as ‘dumb’.
Ford plantWhile publicly-quoted multinationals such as BP (and The Ford MotorCompany, which recently scrapped plans to build a new plant in Mexico after a critical tweet from Trump) are taking an understandably cautious approach during the changing of the White House guard, privately-held trading houses have more flexibility and can negotiate deals quicker than their listed counterparts.
Rosneft refineriesNor is it the first such deal that Vitol has contemplated. Three years ago, it proposed raising $2bn from US and European banks and handing it to Rosneft in exchange for future oil supplies, although the plan was scrapped after the US government slapped sanctions on the Russian energy giant in the wake of the annexation of Crimea.
It seems to have learnt from that episode, and the timing of the deal with NIOC suggests that both sides are keen to secure an agreement before Trump is in a position to block it. 

Source: reuters