February 18, 2022
Two different organizations monitoring oil sales around the world both say Iran recently boosted monthly exports to 1 million barrels a day or the highest since President Trump re-imposed sanctions in 2018. But one of them said sales fell the next month.
They said all the sales were to China. The Biden Administration is known to have discussed Iranian oil sales with China, but it has not yet imposed any sanctions on Chinese nationals or companies.
One million barrels a day is very good for the last three years but it is nowhere near the volume of sales when sanctions were not in effect. Sales then had averaged 2.5 million barrels a day since the 1990s.
In recent weeks, Iranian oil officials have repeatedly proclaimed that the Raisi Administration has boosted oil exports and is receiving much more revenue from oil sales. Various officials have said oil sales were boosted by 40 percent but they did not say 40 percent from what or give any figures on current sales, trying to leave the false impression that the problem of constrained revenues has been solved.
The Consulting firm Petro-Logistics announced that Iranian crude oil sales surged in December to 1 million barrels a day, but then fell back to 700,000 bpd in January. Petro-Logistics Chief Executive Daniel Gerber told the Reuters news agency, “We wouldn’t expect to see one million bpd consistently until there is a change in the political landscape.”
Another consulting firm, SVB International, also reported Iranian crude exports hitting 1.085 million bpd, but said that happened in January rather than December, when it recorded exports of 826,000 bpd. It said sales in February were running at the January level in mid-month.
According to Vortexa Analytics, in 2021, China bought Iranian crude at the average rate of 600,000 bpd, including shipments that were booked as originating from Oman, the UAE and Malaysia but were actually from Iran.
China reported no Iranian oil purchases in any month of 2021 until December. The announcement by China that it was again buying Iranian crude was major news in the industry. But one unnamed oil trader told Hellenic Shipping news, “This is [China’s] attempt to cool oil prices. It’s basically to show the world that there’s more supply even though it’s only available to them.”
Iran has been transferring its crude to non-Iranian tankers at sea in an effort to hide its origin as Iranian. This has made it difficult to get a good reading on Iranian exports.
Iran also exports crude to Syria, but that is on credit, so Iran gets no payments now (if ever) for that crude.
Iran is understood to be exporting some small volumes by truck to Afghanistan.
As for Iran’s income from sales to China, it is widely assumed that China is enjoying a substantial discount but how much of a discount is anyone’s guess.
Meanwhile, Iran’s new oil minister, Javad Oji, has announced that over the next eight years Iran will invest $20 billion to develop oil and gasfields and that China will invest the same amount under the 25-year strategic cooperation agreement signed last year. China has made no such announcement.
The 13 members of the Organization of Petroleum Exporting Countries (OPEC) along with the 10 associated countries in what is called OPEC+ met early in February and took just 16 minutes to decide to stick to their plan to raise output by 400,000 barrels a day each month. But in 2021 the group fell 800,000 bpd short of pumping its quota as most members do not have the capacity to pump to the goal and those that do (Saudi Arabia and the UAE) are refusing to make up the difference, thus pushing prices higher.
