Iranian Oil Exports Rise as Tehran Circumvents Sanctions, Finds New Buyers

On the high end, U.S.-based TankerTrackers.com, which uses satellite imagery to follow deliveries, estimated Iranian crude oil exports hit 1.2 million barrels a day over the fall, up from 481,000 barrels a day in February.

Meanwhile, SVB International in Washington said Iran exported 585,000 barrels of crude oil a day in November, up from 230,000 earlier in 2020. Petro-Logistics saw an increase in exports to about 447,000 barrels a day, from 222,000.

The more conservative figures suggest U.S. sanctions have kept most Iranian crude bottled up. But the sharp increase seen across the three market trackers suggests Tehran has been more successful recently in selling its oil.

Secretary of State Mike Pompeo said last year the U.S. was aiming for zero oil exports from Iran, having previously sought to drive them below 1 million barrels a day, down from their 2018 pre-sanctions levels of 2.5 million barrels a day.

Among the biggest customers for Iran is China, which, according to Beijing’s official trade statistics, imported 62,000 barrels a day of Iranian oil in October, up from zero in June. Industry watchers said the actual totals were likely much higher and included oil transshipped through other Asian countries.

Venezuela—under socialist leader Nicolas Maduro, long at odds with Washington and under American sanctions—has also started buying Iranian gasoline. And Syria resumed Iranian oil imports this year, according to shipping trackers and an Iran oil official.

Iranian shippers have gone to increasing lengths to evade sanctions, switching off radio transponders to avoid tracking, while operators transporting Iranian crude have changed their ships’ names or doctored bills of lading.

More recently, they have begun transshipments of oil in regions once thought to be too risky, including waters off the coast of U.S. allies Iraq and the United Arab Emirates, according to people familiar with the matter.

American officials acknowledge that Iran is exporting oil, but say sanctions have still caused severe economic consequences for the country, including sending the rial sharply lower.

The Iranian currency has depreciated 85% since early 2018, while inflation of over 30% in Iran has turned meat into a luxury product. Government budget cuts last year sparked protests during which hundreds were killed.

Mr. Pompeo has said that sanctions have cut Iran’s oil revenue by $70 billion since May 2018 and that reducing pressure on Tehran would be a dangerous move. In November, Keith Krach, the undersecretary of state overseeing energy policy, described U.S. sanctions on Iran as “remarkably effective.”

Iran will be one of the biggest foreign-policy challenges facing President-elect Joe Biden when he enters the White House in January, and his transition team has said there will likely be changes to policy, including a move to rejoin the 2015 nuclear agreement with Iran. Jake Sullivan, designated as Mr. Biden’s national security adviser, said this month that the administration would be prepared to honor the terms of the deal—a move likely to require a rollback of U.S. sanctions—and use it as a basis for follow-on talks around broader concerns.

Most oil buyers and shippers stopped trading with Iran after Washington slapped a full embargo on Iran’s crude shipments after the Trump administration pulled out of the Obama-era nuclear pact with Tehran in 2018.

Iranian traders and some prospective buyers said they were expecting U.S. pressure to ease once Mr. Trump leaves office.

The Iranians “need to sell oil, and we need energy,” said one official in Italy, formerly a top customer for Iranian crude. Purchases will restart quickly once sanctions are lifted, this official said.

Meantime, resurgent Asian economies are seizing upon the steep discounts Iranian traders are offering. An adviser to a large Chinese oil company said Iran was offering rebates of as much as $1 a barrel for crude. Traders are also selling refined products at lower prices.

Commodities trader Ali Amirliravi said Iran was offering a discount of $70 a metric ton of propane, making it 16% cheaper than Saudi Arabian propane. Buyers in China, India and South Korea have all sought Iranian crude, according to another Iranian trader, who said he has discussed cargoes but had yet to finalize a sale.

In March, Syria resumed Iranian oil imports after the trade was halted by indirect U.S. pressure. Washington forced some countries that had allowed Iranian tankers to register under their flag to revoke those registrations. Iran resumed sales to Syria by sending its own fleet of Iranian-flagged vessels.

This summer, oil-rich Venezuela started buying Iranian gasoline after its refineries all but shut down, in part because of separate American restrictions on Caracas.

In July, the U.S. intercepted four tankers bearing Iranian fuel bound for Venezuela, confiscated the fuel and threatened the Greek shippers carrying it with seizure. In September, Iran sent three of its own tankers, over which the U.S. has less leverage, to deliver gasoline to Venezuela, according to shipping tracker Marine Traffic.

Write to Benoit Faucon at [email protected]