Iran is raking in more cash from oil exports thanks to higher prices despite the decline in amount of oil exported, the country’s Vice President Eshaq Jahagiri told Iranian media, as quoted by Radio Free Europe.
“America thinks Saudi Arabia can replace this oil. But right now Iran’s oil has reached more than $80 [per barrel], and with half the previous exports we will have the same income as before,” Jahagiri said, adding that while some of Iran’s oil clients had stopped buying its crude oil, the country had taken on some new buyers.
"On the other hand, we have also negotiated with traditional customers to find solutions for cooperation," the vice president said, as quoted by state news agency Shana. “It's not strange for countries that are being sanctioned to look for ways to circumvent sanctions.”
Radio Free Europe notes that Jahagiri’s remarks are in essence an acknowledgement that Iran’s oil exports had shrunk by half from 2.5 million bpd exported before President Trump pulled the United States out of the Joint Comprehensive Plan of Action, commonly called the Iran nuclear deal. Related: Are U.S. Oil Exports Really Unstoppable?
Yet, caution is advisable when drawing conclusions about Iran. Some perceptive observers have already noted that Iran has a vested interest in keeping prices as high as possible amid the preparations for U.S. sanctions, which will snap back in November. In other words, Iran would say its exports are falling by a lot even if they are not falling by that much. This suggestion is supported by the practice among Iranian oil tankers to turn off their geolocation equipment, effectively becoming invisible to trackers until they reach their destination, skewing shipping data released in the period while they were invisible.
Ironically, in the last few days oil prices have received strong support from allegations that Saudi agents killed journalist Jamal Khashoggi, creating tension between Washington and Riyadh, Tehran’s arch-enemy in the Middle East. Still, the effect of this tension seems to have been temporary: at the time of writing, Brent and WTI were both trading down slightly from yesterday’s close, at US$80.74 and US$71.65, respectively.
By Irina Slav for Oilprice.com
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What the Iranian Vice President Eshaq Jahagiri was saying in plain English is that with oil prices at $80 a barrel, Iran could earn more income from selling even half of its exports at this price than by selling full exports at the previous lower prices. This is in no way an acknowledgement that Iran’s oil exports had shrunk by half from 2.5 million barrels a day (mbd) exported before President Trump pulled the United States out of the nuclear deal as Radio Free Europe falsely interpreted the Iranian Vice President’s statement. Moreover, Iran’s exports in 2017 averaged 2.125 mbd according to the authoritative 2018 OPEC Statistical Bulletin and not 2.5 mbd as falsely claimed.
And while some customers like South Korea and Japan may have reduced their purchases of Iranian crude pending securing a US waiver, other countries like India, China and Turkey have significantly increased their purchases.
US sanctions against Iran are doomed to fail miserably and Iran will not lose a single barrel from its oil exports.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London