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Iran’s oil keeps flowing – and that suits the US for now

An Iranian oil production platform at the Soroush offshore fields Reuters/Raheb Homavandi
An Iranian oil production platform at the Soroush offshore fields
  • Exports hitting record highs
  • Washington turns ‘blind eye’
  • Trump re-election could change this

Iranian oil exports are hitting record highs despite Western sanctions, delivering a windfall of $35 billion a year to the government in Tehran.

Energy analysts expect this to continue, given the big discounts on Iranian crude and the effects of the conflict in Ukraine.

“Iran has been a beneficial influence in offsetting impacts of war,” says Neil Atkinson, an independent energy analyst. “In 2023, it added 600,000 bpd to the market.”

To keep US consumers from feeling more pain at the pumps, Washington has in recent years “adopted the blind eye approach”, he says, allowing millions of sanctioned barrels to flow.



Tehran also has a reformist president-elect, Masoud Pezeshkian, who has promised to build constructive relations with the West.

Pezeshkian might not get the chance, however. Donald Trump – who imposed the sanctions and ditched the Iran nuclear deal in 2018 – is running for the White House again. If he wins in November, a rapprochement seems unlikely.

Tehran’s crude and condensate exports increased to 1.7 million bpd in May this year – the highest level in more than five years – according to energy markets tracker Vortexa.

This makes the country the fourth largest Opec oil exporter, behind Saudi Arabia, Iraq and the UAE.

Seventeen countries buy Iranian crude, according to oil minister Javad Owji. He told Mehr News Agency last week that “we sell our oil wherever we want to” – but declined to specify who was buying or how it gets there.

Rystad Energy believes about 70 percent of Iran’s oil ends up in China, with Syria and Venezuela also among its customers.

Iran has developed “all sorts of measures to get its exports high”, says Atkinson, including a middleman network, operating on unofficial oil markets, using secondary insurance markets, non-compliance and dark fleets

Kpler, an analytics company, says 265 vessels have been engaged in exports from Iran or shown examples of AIS spoofing since January 2022.

AIS spoofing is the manipulation of a ship's automatic identification system to mask the vessel's actual location, allowing it to pick up Iranian oil undetected.

Additionally, “importers bypass the US financial system by dealing in their local currencies instead of using the US dollar”, says Harshita Dhyani, an analyst at Rystad.

Even with a 15 percent discount, “Iran is earning big money on oil exports,” according to Steve Hanke, a professor of applied economics at Johns Hopkins University in Baltimore.

A second Trump administration could halt this by reimposing tough sanctions, according to Dhyani, even if it would not be the most effective strategy to put pressure on Tehran. 

Atkinson points out that the policy would also lead to higher prices for US consumers, which might give the White House pause.

Pezeshkian may still push for a fresh nuclear deal with the US as he seeks to improve the country's economy and ease its social tensions.

“Previous Iranian presidents have already tried, without success,” says Mehmet Ougutçu, a former Turkish diplomat who now heads trade body the London Energy Club.

For Justin Alexander, director of Khalij Economics, Tehran will be waiting "until the Gaza war ends and after the US election".

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