Glencore, Vitol Near Deal to Buy Iranian Crude

TEHRAN—Glencore PLC and Vitol Group, the world's two largest independent oil traders, are close to signing a long-term deal to purchase Iranian crude, a top Iranian official said.

The potential deal would mark the return of two of Iran's biggest oil trading partners before Western sanctions over the country's nuclear program were tightened in 2012. Iran has sought to ramp up production since those sanctions ended in January. But many Western buyers have been reluctant to purchase its oil because their banks are concerned about falling foul of remaining U.S. sanctions.

Glencore and Vitol representatives declined to comment.

Iran and the two Swiss-based companies are close to reaching separate agreements with state-owned National Iranian Oil Co., said Mohsen Ghamsari, the company's director of international affairs, in an interview.

Mr. Ghamsari said one of the main issues to iron out is that the state company wants to choose the destination of the crude that it sells Glencore and Vitol. It isn't unusual for Iran's state oil company—or those in other countries --to dictate where oil traders market their crude.

In a separate interview, Iran's deputy oil minister Amir Hossein Zamaninia said Glencore and Vitol have purchased mostly oil products from Iran until now.

Glencore—which trades large quantities of oil in addition to the copper, coal and other commodities it mines and sells—became the first Western company to load Iranian oil products since the end of sanctions, but the cargo was made of fuel oil, rather than more expensive crude. It has struggled to find financing for the crude purchase, according to an Iranian trader involved in the deal.

Many European banks have been wary of doing business involving Iran while U.S. sanctions over terrorism and weapons are still in place and a ban remains on dollar-denominated transactions. European banks like HSBC and Standard Chartered have settled previous allegations of doing illegal business with Iran.

U.S. Secretary of State John Kerry traveled to London Thursday to tell European bankers to address their concerns. He said banks could do "legitimate business" in Iran.

Write to Benoit Faucon at [e-mail]

(END) Dow Jones Newswires

May 12, 2016 14:15 ET (18:15 GMT)

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