Iranian Oil Exports: From Reality to Propaganda
Iran oil fields
Written by
Mansoureh Galestan
Officials from the Iranian regime’s Ministry of Oil are claiming that they have managed to achieve oil sales comparable to pre-sanctions levels, all the while receiving payments in cash. A Bloomberg report highlights that despite the U.S. sanctions, Iran’s oil exports have surged, hitting a daily average of 2.2 million barrels during the first 20 days of August. Western sources stress in their reports that China stands as the main recipient of Iran’s oil, given that most nations are adhering to the sanctions placed on the Iranian regime.
How accurate are these assertions?
Regarding this statistic, Hamid Hosseini, the chairman of the board of directors of the Union of Oil, Gas, and Petrochemical Products Exporters, stated, “There is no doubt that there is demand in the oil market and the oil price has increased to $87. However, the ability of Iran to export two million barrels per day raises doubt and ambiguity.”
Hosseini added, “We consume 1.85 million barrels domestically and have the capacity to sell 1.4 million barrels. Based on the current technical conditions in the oil industry, it does not seem that the country can produce more than three million barrels. Moreover, domestic oil consumption should also be taken into account, and the remaining oil balance does not amount to 2 million barrels.”
What is the selling price of the regime’s oil?
One question that regime officials have consistently avoided answering is the price at which they are selling oil, given the sanctions in place.
Oil and energy analyst Simon Watkins has alleged that China is buying Iranian oil at astonishingly discounted rates.
In May 2023, he wrote, “In the 25-Year Agreement, China is guaranteed oil and gas prices from Iran at least 30 percent lower than the relevant oil pricing benchmarks. However, since the Russian invasion of Ukraine in February 2022, China has been demanding an extra discount on Iranian oil to the 30 percent discount at which it can currently also buy Russian oil, according to the Iran source. “On average, the Chinese discount for Iranian crude oil to the international benchmark over the last 12 months has been around 44 percent.”
Yet, these unfavorable terms have deteriorated even more. Starting from November 11, 2022, China has been paying for the oil it purchases from Iran using non-convertible Yuan. This essentially means obligating the regime to exchange oil for Chinese products.
The state-run “Eco Iran” reported on July 30, “In the first quarter of 2023, Iran’s oil exports to China have increased. However, certain news reports suggest that Iran has provided substantial oil discounts to China in order to uphold its market share and enhance exports.”
While Russia reduced its oil exports to China by $9, the Iranian regime has been offering oil to China at discounted rates ranging from $12 to $15 per barrel. Calculations suggest that if Iran maintains its increasing export trend to China (amounting to 930,000 barrels per day) in May and June, it effectively provides China with a discount totaling at least $670 million and potentially up to $837 million over two months. Essentially, it appears that the Raisi government is employing significant oil discounts to protect its market share, boost exports, and generate income within the Chinese oil market.
Why is the Regime Maximizing Sales at Minimum Prices?
With Iran’s industries, domestic production, and agriculture devastated, oil is the sole income source. To support its own malign ambitions and policies while trying to prevent economic collapse, the regime relies on oil plundering and concessions. Despite hefty discounts, complex smuggling is employed to evade sanctions, shifting oil between tankers and ports, incurring costs that greatly diminish revenue from oil sales.
The regime has dual objectives in this effort. Firstly, it seeks to create a façade of control through rhetoric and promotional content for domestic audiences. Secondly, it works to secure foreign currency to maintain its ignoble existence and stay financially afloat.
How has the surge in oil sales impacted the lives of the people?
Despite the funds received, the prices of essential goods continue to skyrocket, leaving no positive impact on Iran’s citizens. While officials close to the regime’s Supreme Leader, Ali Khamenei, and Ebrahim Raisi boast about diplomatic achievements and self-sufficiency, factions marginalized by Khamenei’s consolidation efforts mockingly point out the disparity between TV statistics and the actual contents of people’s refrigerators.
It’s well-known that a portion of these funds is allocated to the regime’s ballistic missile and nuclear aspirations, another part supports affiliated militias in various countries and the vast domestic security apparatus, and the rest is seized by government-controlled mafia-like entities.
Just as Dr. Mosaddegh, the late leader of the national movement, reclaimed and nationalized oil from foreign control 70 years ago, this generation must also liberate Iran’s oil—a national asset—from the grasp of the anti-Iranian clerical regime. Similar to other assets in this prosperous nation, it needs to be reclaimed and nationalized once again.