Iranian oil exports to China triple

Iranian oil shipments to China have more than tripled over the past three years despite the US sanctions on the country and the increase in Russia’s shipments to the Asian country, data released by data analytics firm Kepler show.

According to the data Iranian crude exports to its major trade partner have been hovering around one million barrels per day (bpd) in 2023, while the figure was roughly 325,000 bpd in 2020.

Iranian oil shipments to China have been on upward trajectory since 2019. In 2021 the exports reached 585,000 bpd and in 2022 the figure was reported at 766,000 bpd.

The International Energy Agency (IEA) in a recent report titled "Oil 2023" confirmed Iran's daily export of one million barrels oil to China saying, “Despite severe financial restrictions, Iran managed to increase its crude oil production by about 140,000 barrels per day in 2022 to an average of 2.5 million barrels per day. It seems that Tehran has maintained its crude sales to China, which has been around one million barrels per day since the third quarter of last year.”

Iranian oil production also increased in the current year, in May the country’s oil output reached 2.9 million bpd, 350,000 bpd more than in 2022.

Back in April, Bloomberg reported that Chinese private refineries are buying more Iranian oil despite the rising competition for supplies from Russia.

“The teapot refineries are prioritizing the flows, with Russian supplies getting more pricey as mainstream buyers such as state-owned Chinese refiners and Indian processors take a greater share,” the report read.

In March, Chinese import of Iranian crude and condensate jumped 20%MoM to 800,000 barrels a day, and are on track to extend gains in coming months, Emma Li, an analyst with data intelligence firm Vortexa told Bloomberg.

While Iranian oil has long been sanctioned by the US, refiners in China have proved to be a consistent outlet.

Most Iranian oil used to go to state-owned refineries but the private refiners in Shandong especially are now running the show, said Homayoun Falakshahi, senior crude oil analyst at Kpler.

Earlier this year, Iranian President Ebrahim Raisi said that the oil and gas sector experienced a growth of 9% in the Iranian calendar year 1401.

Oil Minister Javad Oji has also said recently that a new record high will be reached in the country’s oil export in the current Iranian calendar year.

Despite the negative impacts of the US sanctions, Iran has been ramping up its oil production and exports over the past few months.

In his remarks in November 2022, President Raisi highlighted the failure of the enemy’s policy of maximum pressure, saying the country’s oil export has reached the pre-sanction levels.

Back in January, the EIA in a report put Iran’s average oil production in 2022 at 2.54 million bpd, 140,000 bpd more than a year ago.

Iran's oil production in 2021 was about 2.4 million bpd.

Iran oil income reported by EIA at US$54 billion for 2022

According to a report by the US Energy Information Administration (EIA), Iran’s oil revenues in 2022 were reported at US$54 billion, up $17 billion from the country’s oil income in 2021.

The EIA’s report also put the Islamic Republic’s oil revenue in the first five months of 2023 at US$19 billion.

Back in January, the EIA in a report put Iran’s average oil production in 2022 at 2.54 million barrels per day (bpd), 140,000 bpd more than the previous year.

In late April, the European Union's statistics office Eurostat announced the import of Iranian oil by three European Union (EU) members in 2022, and introduced Bulgaria as the newest customer for Iranian oil in this union.

The information published by Eurostat shows that the European Union imported 4,181 tons of crude oil or oil products from Iran last year.

Although the amount of EU oil imports from Iran is not a significant figure, it indicates the desire of European refineries to ignore the US sanctions against Iran, and the inclusion of these figures in the official European oil import statistics shows the desire of the European authorities to distance themselves from the sanctions, or at least showing their objection to the US sanctions policy against Iran.

Iranian President Ebrahim Raisi has said that the oil and gas sector experienced a growth of nine percent in the past Iranian calendar year 1401.

Oil Minister Javad Oji has also said that a new record high will be reached in the country’s oil export in the current Iranian calendar year.

The country’s oil export in 1401 was 83 million barrels more than that of year 1400 and 190 million barrels more than the export in year 1399, the minister announced.

Underlining that now oil export has reached the highest figure in the last two years, the official said, “Considering that the Oil Ministry is one of the main providers of the country's foreign currency; in the 13th government, despite the tightening of cruel sanctions, fortunately, thanks to the grace of God and the efforts of our colleagues in the country's oil and gas industries, there are good records in the field of exporting crude oil, gas condensate, and petroleum and petrochemical products.”

Despite the negative impacts of the U.S. sanctions, Iran has been ramping up its oil production and exports over the past few months.

In his remarks in November 2022, President Raisi highlighted the failure of the enemy’s policy of maximum pressure, saying the country’s oil export has reached the pre-sanction levels.

 

United States exerting more influence on global oil market than other producers

Igor Sechin, Head of Russian energy major Rosneft has said that Russia is losing out to other OPEC Plus countries due to a smaller share of its oil production being exported.

Sechin, a longstanding ally of President Vladimir Putin, also said that the oil output boom in the United States, which is not a member of the OPEC Plus, was wielding more influence on the global oil market than other producers.

Some experts and analysts have noted that Russia's oil exports are still relatively high despite cuts in production.

Speaking at an economic forum, Sechin said some OPEC Plus countries were exporting as much as 90% of their output, whereas Russia supplies the global market with only half of its production.

"That puts our country in a less advantageous position under the current mechanism for assessing the impact and access to key markets," he said. "In this regard, it seems appropriate to monitor not only production quotas, but also oil export volumes, given the different sizes of domestic markets."

Currently, the Organization of the Petroleum Exporting Countries and allies including Russia, a group known as OPEC Plus, regulates only production, not exports.

Amid flagging oil prices, OPEC Plus agreed on a new oil output deal earlier this month, while Saudi Arabia, the group's biggest producer, pledged to make a deep cut to its output in July on top of a broader OPEC Plus deal to limit supply in 2024.

OPEC Plus accounts for around 40% of global oil production, while Rosneft takes the same share of Russia's oil output.

In remarks published later on Rosneft's website from Sechin's speech, he said Saudi Arabia is voluntarily cutting oil production, while also increasing production capacity.

He said Saudi Arabia may increase the amount of drilling rigs by at least a quarter in the next two years. As a result, by 2025-27, Saudi Arabia's oil producing capacity may rise by around 2 million barrels per day.

Speaking at the forum, Sechin also said it was more difficult for OPEC countries to find common ground due to differences in economic structure and oil production.

"In coming years, humanity will face the problem of production capacities and OPEC countries will no longer be able to meet the growing demand," he said.