Iran’s oil minister denied reports on Wednesday that oil exports have declined, even as the Iranian currency continued its downward spiral and the country faced acute shortages of natural gas and electricity.
Speaking after a weekly cabinet meeting, Mohsen Paknejat dismissed the reports as part of “the enemies’ psychological warfare,” pointing blame to the impact of global sanctions, stating, “We have no problems with selling oil, and measures have been put in place that will continue to prove effective in the future.”
The United States imposed third-party sanctions on Iran’s oil exports in 2018 when it withdrew from the 2015 JCPOA nuclear deal. China has been the only major buyer who has allowed Iranian oil to enter its refineries, gradually increasing the volume since 2021.
Earlier this month, reports surfaced suggesting a significant drop in Iran’s oil deliveries to its primary consumer, China, during October and November. A commodities trader added to the speculation last week by tweeting that sales to China halved in December, falling below 800,000 barrels per day, compared to nearly double that amount during the first eight months of 2024.
However, data from tanker tracking firm Kpler shows that there is no clear evidence of such a substantial decline, making conclusions about December's final numbers as yet unclear. Iranian oil offloading in China can fluctuate significantly day-to-day, with below-average deliveries in the first half of the month potentially being offset by above-average shipments in the second half.
Earlier this month, Iran International reported that Tehran’s oil deliveries to China showed a steadily decline in October and November, based on information received from tanker tracking firms.
The decline could have several reasons, among them the closure of the small Chinese refineries due to environmental reasons. Another reason could be the return of Donald Trump who has pledged to resume his “maximum pressure” on the Islamic Republic of Iran.
China accounts for 95% of Iran's oil exports, but it does not purchase the oil directly. Instead, small independent refineries buy Iranian oil after it is blended with crude from other countries, ensuring it is not labeled as Iranian by Chinese customs, in order not to overtly violate the US sanctions.
Nevertheless, as Iran offers significant discounts to Chinese buyers and absorbs the additional costs of concealing shipments to bypass sanctions, it fails to generate sufficient revenue to sustain its oil-dependent economy.
Since the imposition of US sanctions, Iran’s currency has depreciated 18-fold, while persistent inflation has exceeded 40% over the past five years. The sanctions have also hindered the country’s ability to invest in maintaining natural gas production and upgrading its power grid, resulting in severe energy shortages that have paralyzed the country.