Since the late 1970s, the United States has imposed sanctions against Iran for a multitude of reasons. Only in 2006 did the rest of the international community, through the United Nations Security Council, join in sanctioning Iran over growing concerns that its nuclear program was not peaceful. Facing mounting pressure, November 2013 saw the signing of the so-called “Joint Plan of Action” during nuclear talks in Geneva. This agreement between Iran and the P5+1 marks the first legitimate steps that have been taken to halt the imposition of international economic sanctions that have cut Iran off from participating in world trade and has led to the temporary lifting of sanctions against certain goods and services while negotiations are ongoing. Considering this, it is very realistic to assume that the near future will see a complete lifting of international sanctions against Iran. For this reason, this thesis focuses on how the lifting of economic sanctions will affect one of Iran’s most important and growing industries, the petrochemical industry, and in turn the global chemical tanker sector. Through the use of two different models, the gravity model and the global simulation model, this thesis lays the groundwork for quantifying the effects that sanctions have on bilateral trade and projecting future trade flows in the wake of their removal. The results of this thesis indicate that a lifting of sanctions will greatly benefit the Iranian petrochemical industry, as total output will increase by 12 percent. Other countries will suffer losses, such as China and India, which both do not currently abide by the international sanctions and continue to trade heavily with Iran in a restricted market. A shift in trade flows from Iran back towards Western trade partners such as the US and EU are to be expected. Other countries that once enjoyed good trade relations with Iran, such as South Korea and Switzerland, will also benefit from sanctions’ removal. Other than shifts in maritime traffic from Eastbound to Westbound routes, the chemical tanker sector can expect both an increase in utilization and freight rates, thanks to the removal of shipping restrictions on Iranian cargoes and an increase in the global petrochemicals trade. Additionally, the chemical tanker sector will need to rethink its logistics, as restrictions governing the carriage of hazardous goods results in cargoes that may not be allowed to precede other cargoes aboard a ship. Luckily, the majority of Iranian output is made up of relatively “easy” chemicals such as methanol and xylene, which are approved previous cargoes. This will allow for increased opportunities for backhaul cargo carriage, resulting in less ballast legs and greater ton-mileage for the sector. In short, the thesis finds that the lifting of sanctions will benefit both Iran and sanctions-imposing countries while hurting those countries that have taken advantage of an artificially less competitive market. The reopening of the petrochemicals market will also have a positive impact on the chemical tanker sector.

Berden, K. (Koen)
Maritime Economics and Logistics
Erasmus School of Economics

Fries, M. (Matthew). (2014, September 5). The repeal of economic sanctions against Iran: Global economic implications and opportunities for the chemical tanker sector. Maritime Economics and Logistics. Retrieved from