Tehran, Iran – Iran says its oil sales have remained at relatively high levels despite changes brought about by the effects of the war in Ukraine and continued US sanctions.
Iran now exports more than a million barrels of crude oil and gas condensates a day, according to oil ministry data quoted by state news agency IRNA and the government daily, Iran.
Overall, the outlets said Iran sold 40% more crude, petroleum derivatives, natural gas and gas condensate in the first two months of Iran’s calendar year in course that ended on May 21 compared to the corresponding period last year.
Senior officials in President Ebrahim Raisi’s administration have repeatedly said that oil sales in the first months of his presidency jumped 40%, while refraining from releasing detailed figures as the country remains subject to to strict US sanctions.
But actually receiving the returns from the sale of crude and other products has been another huge problem for Iran since former US President Donald Trump embarked on his ‘maximum pressure’ sanctions campaign in 2018. after pulling out of the 2015 Iran nuclear deal.
Officially known as the Joint Comprehensive Plan of Action (JCPOA), the historic agreement reached between Iran and world powers, including the United States, aimed to curb Tehran’s nuclear program in exchange for easing of sanctions.
But Trump’s successor Joe Biden, who promised to revive the nuclear deal, kept the sanctions.
According to Iranian media, the country has also fared better in this regard, as it took in $7.5 billion in sales of petroleum and petrochemical products in the first two months of Iran’s calendar year, or 60% more than the previous year.
Although they attributed the significant increase in world oil prices mainly due to the war in Ukraine as being partly the reason for this increase, they said that the main reason was a considerable increase in real oil sales by the government and more success in receiving money.
It comes as Iran’s crude exports have been hit hard as Western sanctions on Russia prompted it to pump its oil east at a discount, an opportunity that was seized by China, the largest buyer of Iranian barrels.
US and European sanctions imposed following Russia’s invasion of Ukraine in late February and the subsequent steep discount of Russian crude have left nearly 40 million barrels of Iranian oil stored on offshore tankers in Asia without buyers, data and analytics firm Kpler said late last month. .
The company also estimated Iranian crude exports were below a million bpd before April and only saw a decline in April due to the effects of the war in Ukraine.
But the statement from Iran’s Oil Ministry quoted by IRNA countered that while the country’s oil exports may be affected by market changes, they will not face drastic declines and “only market geography can change. “.
Apparently referring to Iran’s rebates, the ministry confirmed that it allocates “facilities” to make its oil more attractive to buyers, but stressed that “oil sales will never be made without ensuring the interests of the country first”.
Moreover, he claimed that oil sales had been large enough to cover Iran’s budget deficit from the previous year and allow the Raisi administration to run the country without borrowing from the central bank, a practice that has been l one of the main drivers of runaway inflation throughout the year. decades.
As Russia produces more oil, it has more options to offer discounts while its absence from the market leads to more price hikes, according to energy journalist and analyst Hamidreza Shokouhi.
“When the figures show that China and India have increased their purchases from Russia, naturally a country like China will not cancel its overt contracts with other countries, it will reduce its consumption of countries like Iran “, he told Al Jazeera.
“This is all the more true since Russia offers better discounts, which is more attractive to China because it buys large quantities, regardless of who sells it.”
On the other hand, Shokouhi said Iran could not offer significantly higher discounts because its production capacity – recently fluctuating between 2.5 and 2.8 million bpd – is limited.
That’s when some 15 months into talks in Vienna aimed at restoring the 2015 nuclear deal between Iran and world powers, they have yet to make a breakthrough. If the deal is reinstated, sanctions against Iran’s oil and banking sectors will be lifted.
But the United States has signaled that it will exert more pressure on Iran, including more stringently imposing its oil sanctions, if the talks break down.
US and European officials have recently warned that the chances of reviving the deal are dwindling, which will have ramifications for Iranian oil, regardless of how well the sanctions are implemented.
For one thing, the country was producing up to four million bpd before the sanctions, about half of which was exported. But the opportunity is now being missed to sell far more oil than it is when global prices are more than three times their pre-sanctions levels, Shokouhi said.
“But the second aspect, which I think is even more important, is that we cannot attract investment and technology to develop our oil and gas fields,” he said, adding that the launch of several energy fields has been stalled for years.
“Every day that we delay, our production capacity could be affected and we must take this into account.”