High Prices Helping Iran Make Up for Loss of Half of Oil Exports

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The FINANCIAL — Iran has lost some customers for its oil because of looming U.S. sanctions, but high prices are making up for the lost sales, Iranian Vice President Eshaq Jahangiri has said.

Jahangiri said that some countries that have stopped importing oil from Iran are looking for workarounds that would allow them to continue to import energy from Iran indirectly, according to RFE/RL.

U.S. officials have said they want to cut Iran’s oil exports to “zero.”

Still, Jahangiri’s remarks indirectly acknowledged that Iran’s oil exports have been effectively cut in half from a peak of about 2.5 million barrels a day in April as customers fled in anticipation of the U.S. sanctions.

Jahangiri’s remarks come amid signs that Iran is scrambling to try to maintain its oil exports, which are declining so fast that the International Monetary Fund last week estimated they had already driven Iran’s oil-fueled economy into recession.

The National Iranian Oil Company announced that Tehran is resurrecting an oil exchange it used to sell oil during a last round of global sanctions four years ago before most sanctions were lifted under Iran’s 2015 nuclear deal in exchange for curbs on Iran’s nuclear activities, according to RFE/RL.

The oil exchange is a mechanism that attempts to sidestep the U.S. sanctions, which are being reimposed following the U.S. withdrawal from the nuclear deal, by allowing private companies to buy the crude at auction in Tehran and then resell it privately on the open market.

The Times of Israel reported that Iran also may have reached a deal with Russia last month to take delivery of Iranian crude oil and then refine it and sell it to global buyers, in yet another possible scheme to bypass U.S. sanctions by “laundering” the oil through Russian markets.

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Reuters reported on October 15 that oil tankers continued to carry Iranian oil exports to China, India, Turkey, Italy, and a few other destinations earlier this month, one month ahead of the reimposition of oil sanctions.

In the first week of October, Iran’s crude exports averaged 1.1 million barrels per day, according to Refinitiv Eikon, an industry source of data on tanker traffic.

While most oil analysts have attributed the sharp rise of premium crude prices since April to over $80 a barrel at least in part to the loss of Iranian exports, the U.S. special envoy for Iran, Brian Hook, told reporters in Paris on October 15 that the market is doing fine with less Iranian oil.

 

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