The world's fifth-largest oil exporter Iran is storing millions of barrels of crude on tankers as it struggles to sell the product on which it depends, trade sources said on Thursday.

The development comes at a time of seasonally lower crude demand because of refinery maintenance and amid growing pressure from the West on Iran over its nuclear programme. Oil exports are Iran's key revenue earner.

Shipping sources gave varying estimates on how much crude Iran was storing, but all said the volume was rising.

One source estimated Iran had crude on 19 very large crude carriers (VLCCs) and one smaller suezmax tanker, compared with around 12 VLCCs at the end of March.

A VLCC can store up to 2 million barrels of crude oil, while a suezmax can store up to 1 million barrels. Iranian officials declined to say how much crude was being stored, but confirmed that there was oil on tankers.

'It's not as many as 20 vessels, but some of our customers do have crude on tankers in the Gulf,' one Iranian oil official said. 'One of the reasons is due to refinery overhauls.'    

Global demand typically falls in the second quarter as northern hemisphere refineries undertake work on units and switch to heavier gasoline output for the summer season away from heavier heating oil and diesel output in the winter.

Another Iranian official said the build up mirrored a rise in Iranian crude in storage in 2008, and was due to the rise in the outright price of crude.

Oil traded at around $86 a barrel on Thursday, within sight of an 18-month high of just over $87 a barrel hit earlier this month.
   'Sometimes when the price goes up, refiners wait to buy,' the second official said. 'They want to be sure that it will stay at these levels before they buy.'    

Iran experienced a similar build up of crude in 2008. Much of Iran's crude is heavy and has a high sulphur content, making it harder and more expensive for refiners to convert it into valued transport fuels.

'One theory is they are having trouble selling the cargo,' a shipping source said. 'It could be due to lack of demand for some heavy Iranian crude.'         

The United States is pushing for a fourth round of UN
sanctions on Tehran over its refusal to halt sensitive atomic work the West suspects is aimed at making nuclear bombs, a charge Iran denies.

Two trading sources said political factors may have made buyers reluctant to buy crude. But there has been no sign world powers are considering sanctions on buyers of Iran's exports of around 2 million barrels per day.

'It must be political pressure, I can't think of any other reason,' a trade source said. 'Prices have been a bit better in the past two months.'    

Iran is OPEC's second-largest oil producer. Iran's oil minister Masoud Mirkazemi was quoted on Wednesday as saying UN sanctions would have no impact on Iran's oil industry.

Energy-hungry Asian countries are the main buyers of Iranian oil. Recent months have seen a drift by some countries in Asia away from crude sourced from the Islamic Republic, but China remains a big importer of Iranian oil.   

'It seems that more people are pulling out of arrangements with Iran,' a Mediterranean Urals crude oil trader said. A second shipping source estimated up to 19 tankers were being used by Iran's NITC tanker company to store crude oil.

Another source pegged the tally at 11 tankers -- with 2 anchored in the Red Sea, eight in the Middle East Gulf and one off Singapore, adding that a further four were also possibly being used for storage.   

Iran has no onshore storage for oil produced at the offshore Soroush and Nowruz oilfields, so always keeps some crude on floating storage off its Gulf coast. US refiners have long been prohibited from processing Iranian crude under sanctions, but refiners elsewhere face no such ban. - Reuters