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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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U.S. Sanctions Have Crippled Iranian Oil Production

The U.S. sanctions on Iran’s oil sector are impacting the Islamic Republic’s ability to potentially increase production in the long term if the U.S.-Iran tensions subside and sanctions ease.  

Iran relies 100 percent on imports for oil rig equipment, but the sanctions have stifled such imports from the U.S. and Europe, Mohsen Mihandoust, a director at Iran’s Society of Petroleum Engineers, told Reuters in an interview published on Tuesday.

Due to the sanctions, at least a quarter of the oil rigs, or 40 out of 160, in Iran are now out of work—either idle or under repairs, Reuters reported, citing financial documents and sources in the industry.

Iran’s oil rigs will be inefficient or very old within the next five years, according to Reuters’ sources.

With the U.S. sanctions in place, Iran doesn’t have many options to repair rigs in the short to medium term because it cannot import spare parts.

Even in the event of the U.S. lifting the sanctions, Iran’s oil industry may need years to recover its oil production to levels last seen just before the sanctions were imposed in May 2018.

The U.S. sanctions on Iran’s oil industry and exports have significantly cut Iranian oil exports, as the United States ended in May last year all waivers for all of Iran’s oil buyers and is going after anyone dealing with Iranian oil.

Iran continues to export oil, using all back channels it can think of. However, the primary buyer of Iranian oil under the ‘no exemption’ sanctions, China, is experiencing an unprecedented slowdown in oil demand due to the coronavirus outbreak, so it’s not clear how much oil Iran can place with its key customer in the coming months.

Meanwhile, the U.S. is now going after Iran’s floating storage. Washington plans to issue warnings to oil shippers, insurers, and port authorities that storing Iranian crude oil will bring the wrath of U.S. sanctions, a U.S. State Department official said on Monday.

By Tsvetana Paraskova for Oilprice.com

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Leave a comment
  • Mamdouh Salameh on March 11 2020 said:
    The Iranians are pastmasters at making do with what they have or developing home-grown technology. So repairing oil rigs is easy for them.

    And contrary to the author’s claim, it didn’t take Iran more than a year to recover normal crude oil production after the lifting of the previous sanctions in 2016. This will be no different when the current sanctions are eventually lifted.

    And despite the most intrusive US sanctions against its crude oil exports, Iran is finding ways to circumvent the sanctions whether by barter trade, or direct supply of crude oil to its main customers namely, China, India, Turkey and the European Union (EU) or ship-to-ship transfer.

    So far the United States has failed miserably to stop Iran’s crude oil exports or effect a regime change. This will continue to be the case until the United States gets fed up with its own sanctions.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Aceof Spades on March 11 2020 said:
    More proof that COVID-19 has been engineered in a lab:

    From today’s article from LIVESCIENCE.COM...Scientists figure out how new coronavirus breaks into human cells:

    (Start quote)
    Researchers led by Qiang Zhou, a research fellow at Westlake University in Hangzhou, China, have revealed how the new virus attaches to a receptor on respiratory cells called angiotensin-converting enzyme 2, or ACE2.

    "They have pictures all the way down at the level of the atoms that interact at the binding interface," Thomas Gallagher, a virologist at Loyola University Chicago who was not involved in the new research but studies coronavirus structure, told Live Science. That level of information is unusual at this stage of a new virus outbreak, he said.

    "The virus outbreak only began to occur a couple months ago, and within that short period of time, these authors have come up with information that I think traditionally takes much longer," Gallagher said.
    (End quote)

    The bottom line is....the pace at which China's researchers are moving on COVID-19 research is too good to be true, unless of course they already have done all this research.

    Again, most doctors I talked to agree that the only way to stop this very contagious virus in a country of 1.4 billion people, limiting the number of cases to only a few hundred thousand, is through a vaccine.

    If this is true and China has been effectively vaccinating portions of its population, then our doctors and medical experts are significantly underestimating the impact this virus will have on countries other than China because they are using China as a guide with the assumption that China has not vaccinated anyone.

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