Without A Nuclear Deal, Iran's Exports of Oil Will Peak in 2022

Despite U.S. sanctions, Iranian oil exports reached new heights in the final two months of 2022 and are off to a strong start in 2023, according to companies that track the flows, due to an increase in shipments to China and Venezuela.

In 2018, former U.S. President Donald Trump withdrew from a 2015 nuclear agreement and reimposed sanctions aimed at restricting Tehran's oil exports and the government's income from them. Since then, oil exports from Tehran have been curtailed.

According to some estimates, exports have reached their highest level since 2019 during the administration of his successor, President Joe Biden, who had advocated for the extension of the nuclear agreement. This is despite challenges such as a stalemate in negotiations and competition from discounted Russian crude.

An energy analyst, SVB International, calculated that Iran's crude exports averaged 1.137 million barrels per day in December, a 42,000 bpd increase from November and its highest expectation for 2022.

According to Sara Vakhshouri of SVB, there has been no big crackdown or action against Iran's oil exports compared to the Trump administration. The exports in January were comparable to those of recent months.

"Reduced Chinese demand and Russian supplies to China have proven to be a formidable challenge for them. It continues to send the majority of its oil to the Far East, especially China. Iran also helps Venezuela export crude oil."

The National Security Council spokesperson for the White House, Adrienne Watson, indicated that the administration's enforcement of the sanctions is thorough, and that "Iran's macroeconomic statistics clearly demonstrate this."

Watson remarked, "We have not and will not hesitate to take action against sanctions evaders, sanctions on Iran's missile and drone trade, and human rights violations against the Iranian people." Late last year, the Treasury Department sanctioned an oil smuggling organization with ties to Iran's Islamic Revolutionary Guard Corps (IRGC).

In December, according to Petro-Logistics, Iran's shipments of crude oil reached their highest level since March 2019.

Kpler, a data intelligence firm, reported that Iranian petroleum exports reached 1.23 million barrels per day (bpd) in November, the highest level since August 2022 and close on par with April 2019's output of 1.27 million bpd, before dropping to just below 1 million bpd in December.

In response to a request, the Iranian oil ministry refused to comment on shipments. This week, the semi-official Fars news agency reported that Iran's projected budget is contingent upon significantly higher oil exports of 1.4 million barrels per day.

Iran's major market is China. In order to dodge sanctions, the majority of Iran's crude exports to China are repackaged as petroleum from other nations, according to experts like FGE. Iran has previously asserted that documents concealing the origin of Iranian goods were fabricated.

Moreover, Iran extended its engagement in Venezuela, which is also subject to U.S. sanctions, by transporting light oil for refining and diluents to produce exportable crude grades.

There is no accurate data regarding Iran's oil exports, and estimates vary widely. Tracing the flows of tankers requires a number of methods, including satellite data, port loading data, and human intelligence. Iran does not release data generally.

According to another study, Vortexa, China's imports of Iranian oil reached a record high of 1.2 million bpd in December, up 130% over the previous year.

The majority of these exports arrived in Shandong, where independent refiners have changed to reduced grades since the second half of 2022 in response to sluggish local demand and diminishing refining margins, according to the business.

In response to a request for comment, China's Foreign Ministry's press department stated, "The legitimate and reasonable cooperation between China and Iran under the international legal framework deserves respect and protection," without directly addressing Reuters' question about China's record oil purchases from Iran.

The supply of Russian Urals, the major rival grade to Iranian oil, fell in December due to buyer uncertainty generated by a price cap on Russian crude exports and a prohibition by the European Union.

A renegotiated nuclear accord would let Iran to increase exports to former clients such as Europe and South Korea.

In November, Washington's special envoy for Iran warned that Tehran's crackdown on anti-government protestors and sale of drones to Russia have detracted from the pact.

As a result of Trump's withdrawal from the nuclear deal and reimposition of sanctions, Iran's oil shipments plummeted from over 2.5 million bpd in 2018 to as low as 100,000 bpd at points in 2020, according to tanker tracking services.