Together, the USA and the EU want to restrict Iran’s oil exports as much as possible. But the country is shipping oil at record levels and raking in billions. The biggest customer: China.
After the drone and missile attack on Israel, Western countries want to tighten sanctions against Iran. But they face a problem: the country always manages to circumvent the punitive measures or cushion the consequences. This is particularly evident in crude oil, which is by far Iran’s most important source of income.
The country is exporting more oil than ever before in the last six years, reports the Financial Times, citing data from industry service Vortexa. According to this, Iran sold an average of 1.56 million barrels (159 liters each) every day in the first three months of the year, earning around $35 billion.
Western sanctions against Iran were imposed because of its nuclear program and tightened because of its support for Russia’s war of aggression against Ukraine. But while the USA and the European Union ban the purchase of Iranian oil, a shadow fleet of tankers is shipping the raw material primarily to Asia. The lion’s share of it goes to China. In order to conceal the transports, the ships at some point illegally switch off the AIS positioning system on their way, which can be used to locate them.
The routes can still be analyzed using the last known position of the ship, other data or satellite images. Like the “Financial Times” citing the ship tracking operator Kpler reported, nearly all Iranian oil sold this year went to China. The People’s Republic sources around ten percent of its oil imports from the country.
Discounts are getting smaller
This is a worthwhile deal for both sides. Iran receives urgently needed billions, while China gets the raw material at a discount. Last year the discounts were significant. According to the Reuters news agency, the price for a barrel of Iranian light oil in China was $10 below the world market price for a barrel of the global benchmark Brent from the North Sea. But the discount is now smaller and is now said to be around $5 per barrel.
In order to restrict Iran’s oil exports, the USA has begun to seize tankers and confiscate suspected Iranian oil – so far with limited success. Iran strikes back and repeatedly seizes oil tankers in the Persian Gulf. The usual reason: alleged fuel smuggling. However, tougher action against Iran is risky for the USA. If the oil dispute escalates, it could cause the price of the raw material to rise noticeably – and fuel inflation.