Iran could be storing as much as 38 million barrels of crude oil as international sanctions make exporting more difficult, a senior shipping executive said on Tuesday.

The Islamic Republic was using 19 Very Large Crude Carriers (VLCC), which can each carry 2 million barrels of oil, to store crude oil despite an oil market structure that made it uneconomic, said Morten Arntzen, president of US-listed Overseas Shipholding.

His estimate was higher than other shipbrokers, who last week pegged Iranian floating storage between 24 million and 32 million barrels.

'With backwardation, there is no incentive for floating storage with the exception of Iran, which has to store crude oil because they need to store excess production that they cannot sell,' Arntzen, the head of the world's second largest publicly traded tanker firm, told reporters at an industry conference in Singapore.

Western powers introduced tougher sanctions against Iran last year that targeted its oil and gas trade to pressure the Islamic Republic to stop development of its atomic programme.

The West says Iran was seeking to develop a nuclear bomb, while Tehran says its atomic programme was peaceful.

Arntzen did not say how many of the 19 VLCCs were being used for long term storage.

Shipping sources said last week Iran was storing crude at sea on 12 VLCCs, while broker E.A. Gibson said the country was using 16.

A further 12 million barrels of crude oil was being held in shorter-term storage involving shuttle transits to the Red Sea oil terminal of Sidi Kerir, shipping sources said. That compares with a peak of up to 25 tankers, mostly VLCCs, last year, which was the highest build up of Iranian crude at sea since 2008.

Separately, Arntzen said 39 clean tankers were being used globally to store fuel products, but did not specify a volume. – Reuters