Two weeks ago, Iran announced that it plans to increase oil production and exports despite ongoing US sanctions. Producer state?
In early September, Iran announced that it would increase its oil production over the next few months, despite ongoing US sanctions restricting the country’s export market.
Iranian Oil Minister Javad Owji said that “there is a strong will in Iran to increase oil exports despite unfair and illegal US sanctions.” Continuing by saying, “I promise good things will happen with Iranian oil sales in the months to come.”
After three years of reinstated sanctions, after the United States withdrew from the Joint Comprehensive Plan of Action (JCPOA) under President Trump in 2018, Iran seems to be fed up with the United States using energy as a political tool . Production levels fell to less than 500,000 bpd of oil for much of 2019 and 2020, which dealt a severe blow to the Iranian economy, as well as its trade ties, leaving Iran behind. extremely tired of the current situation.
The new president, Ebrahim Raisi, was elected in June this year, offering the international community hope that Iran would finally reach a nuclear deal with the United States, which would see the relaxation of energy sanctions and a upsurge in oil production and exports. However, to this day, that remains to be seen.
Energy giant Iran sits on the world’s fourth largest oil reserves, and said the country plans to increase production from 2.1 million barrels per day of oil to 3.8 million barrels. per day if President Biden eased sanctions. This will go hand in hand with the easing of OPEC + restrictions on oil production this year.
However, in recent weeks Iran has come under fire for continuing to significantly increase production of highly enriched uranium and for failing to fully cooperate with international observers. This increased production could provide Iran with ADM capabilities, which US sanctions were supposed to deter.
Meetings between the United States and Iran to discuss the possibility of relaunching the JCPOA, i.e. limiting Iran’s nuclear program in return for American support for the country’s oil and gas industry and the end of sanctions, have been suspended since the Iranian general elections in June. . Meanwhile, Iran has increased its atomic activity and sought to establish economic support from key energy partners, China and Russia.
Iran apparently defied sanctions this month by shipping crude oil exports to Lebanon via Syria, according to TankerTrackers, an online service that monitors ships. Iran is also reportedly supporting Syria’s energy deficit by shipping three tankers a month to the state. Vessels carrying oil have been known to disable their Automatic Identification System (AIS) transponders as a means of moving around unnoticed.
In addition to Lebanon and Syria, Afghanistan, under its new Taliban regime, is expected to depend on ongoing Iranian oil imports to meet its energy needs. Iran resumed its fuel exports to the war-torn state in late August after a pause on exports due to security concerns. The Taliban have called on Iran to continue its route of exporting energy to Afghanistan, as the Taliban view US sanctions as less threatening after US troops withdraw from the country.
Prices in Afghanistan soared to $ 900 a tonne of gasoline, forcing the Taliban to admit their dependence on Iran for their fuel needs. The Taliban have decided to cut tariffs on imports of fuel, including gasoline, diesel and LPG, from Iran and other neighboring states. Despite the sanctions and the continued US presence in Afghanistan, Iran apparently exported around 400,000 tonnes of fuel to the state between May 2020 and May 2021. However, the actual numbers are unknown and could be much higher.
Iranian oil sales appear to have increased overall in 2021, with international watch groups speculating that Iranian exports in the spring totaled twice as much as last year. With oil prices rising continuously since the start of 2021, this could be important for the struggling Iranian economy. However, some suggest that the illicit export of oil through intermediaries could have a negative impact on Iran’s oil profits.
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Iran has projected its oil exports for this period to be around 2.3 million barrels per day and it has officially declared that it has only reached 3% of that projection. However, experts speculate that the actual export figure could be around 650,000 bpd, or about 30% of its projected target, meaning that the actual state of Iran’s oil industry and ties to export is unknown.
Iran is believed to have middlemen supporting its oil export business in China, returning vital goods to Iran in exchange for fuel. This means that Iran realistically receives little money for these exports, even if it is already increasing its oil production.
As the new government presents its plan to increase oil production in 2021 as well as apparently increase its atomic activity, essentially having its cake and eating it, the relaunch of the JCPOA looks more uncertain. However, if Iran is to bring its energy trade ties back into the open and profit from them, it will need to reduce its dependence on middlemen carrying out covert operations, which means it will need the support of states. United to help its oil economy prosper again.
By Felicity Bradstock for Oil Octobers
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