NICOSIA, Cyprus — Oil industry sources said Monday that U.S. and French boycotts have forced Iran to send out chartered tankers laden with millions of tons of what they called "homeless crude" in search of a buyer.
The Tehran government needs cash to fund its 7-year-old war with Iraq and is prepared to offer discounts in Europe and Asia to combat a worldwide drop in demand for crude, said the sources, who spoke on condition of anonymity.
The respected Middle East Economic Survey said at least seven tankers were heading for Rotterdam in the Netherlands with about 13 million barrels of oil for sale on the market there.
Another 2 million barrels of Iranian crude is in storage ashore, the Nicosia-based oil weekly reported.
The sources said Iranian officials have been seeking storage facilities in Singapore and other Far East locations for unsold oil.
The Iranians are reportedly offering to pay delivery, insurance and freight charges, trimming their profit margin, in a bid to unload the oil. Iraqi oil production, badly hit in the early years of the war, is now surging. Indications are that Baghdad now is gaining in the crucial economic war some analysts believe could eventually decide the conflict's winner.
Conversely, Iran's oil installations and tankers in the Persian Gulf are under constant Iraqi air force attack.
The Economic Survey said Iran's new selling tactics have had a boomerang effect on Tehran's crucial oil sales by contributing a "a significant weakening of the oil market," where prices are slipping because of the "plentiful availability" of oil.
Oil is Iran's economic lifeblood and the revenue it earns from its exports is vital to its war effort.
Iran's production has fallen in recent weeks because of the sustained Iraqi military blitz on its oil industry, boycotts on its oil by the United States and France and a big cutback in purchases by Japan.
Its output last month was estimated at around 1.8 million barrels a day, about one-third of its Organization of Petroleum Exporting Countries quota of 2.37 million barrels a day.
There were no statistics available for Iran's exports, but it needs about 600,000 barrels a day domestically.
On that basis, Iran's exports could have been as low as 1 million barrels a day last month, half its estimated August level. With prices sliding, that is certain to have had a considerable effect on its revenue.
Iran's deputy oil minister, Kazempur Ardebeli, has denied that Tehran is selling oil at a discount. But sources said officials of the National Iranian Oil Co. are "scouring Europe and Asia" to find buyers.
Iraq's oil production is meanwhile increasing. The economic survey quoted Iraq's oil minister, Issam Chabli, as saying Baghdad hit 2.75 million barrels a day in October and there are plans to boost that to 3 million barrels daily.
Unlike Iran, whose only export route through the gulf is prey to air attack, Iraq now pumps its oil through more secure pipelines across Turkey and Saudi Arabia.
Oil industry sources said Iran's plight has been aggravated as high production of other OPEC states, including Iraq, pushes world oil prices down.
The survey estimated that output by members of the OPEC last month was as high as 19 million barrels a day, about 1 million barrels above the cartel's fourth-quarter quota.
Production by the 13-member OPEC has been running well above its self-imposed quota for months, contributing to the glut that has nudged prices down to below OPEC's benchmark of $18 a barrel.
The price of some types of Iranian crude have dipped from a market level of $17.50 a barrel to $16.70, industry sources said.
According to calculations by the International Monetary Fund and other Western economic sources, Iran's exports earned it an estimated $6.6 billion last year following the slump in oil prices.
Western economists estimate the war costs Iran up to $10 billion dollars a year.
Iraq earned nearly $7 billion dollars in 1986, but has an estimated $50 billion foreign debt.