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Dubai: Money, not politics, is behind Iran's review of oil output levels, say refiners that buy crude from the Organisation of Petroleum Exporting Countries's (Opec) second biggest producer.
US crude jumped to a record near $127 a barrel on Tuesday after Iran's President Ahmadinejad was quoted as saying Tehran was studying a plan to cut output.
Some traders leapt to the conclusion Ahmadinejad was pursuing his dispute with the US, which has taken issue with the country's nuclear programme.
But Iranian oil ministry officials and customers said Iran is only reviewing its output because stocks have swollen.
Refiners are refusing to pay up for heavy Iranian crude that is difficult to convert into transport fuels and Iran is refusing to cut prices further.
"This is about the price and quality of the oil," said one buyer of Iranian crude. "This crude is a nightmare for refiners. There is a price for everything and if they want to get rid of the stuff they will have to stomach selling at a lower price."
Refiners said they were not under political pressure to stop buying Iran's oil. Such pressure from the US has impeded fuel sales to Iran and kept international companies from investing in new oil and gas projects.
"We've told them we'll buy it at the right price," another buyer said.
Iran would not want to lose out on potential oil revenues with a politically-motivated cut while oil prices were near record highs, an Iranian oil ministry source said.
"It would be too great a loss economically to us. If oil was going to be used as a weapon it would have been used a long time ago, not now," the Iranian source said.
Iran has leased a fleet of giant crude vessels to sit offshore holding the crude it has yet to sell.
The ships can hold more than 30 million barrels of crude, more than a week of Iran's oil output. Shipping sources say they are nearly full.
The speed of the build-up has puzzled oil traders. Iran has trimmed oil exports by about 200,000 barrels per day (bpd) since early April to match a fall in international demand as refiners undertake seasonal work.
The adjustment would only account for around eight million barrels of the stored crude, which sources said has built up over the past six weeks. Much of the crude on the tankers is from the Soroush and Nowrouz fields, which produce around 190,000 bpd.
Iran faced a similar situation in July 2006, when it held around 20 million barrels in tankers. That crude was sold at a steep discount, mainly to India and Royal Dutch Shell.
Iran would need to cut another $6-$10 a barrel from its Soroush price to encourage sales.
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