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The Israeli army has been striking Iranian oil tankers and other vessels, bound for Syria, for months, the Wall Street Journal reports, citing U.S. and Middle Eastern officials.
The motivation for the attacks has been that oil profits help fund extremism in the Middle East, according to the report.
Iran has been a regular supplier of oil to Syria amid sanctions against both countries from the U.S. in Iran’s case, and from the U.S. and Europe in Syria’s case.
Syria, however, has been a relatively minor export destination for Iranian oil. China, on the other hand, has been gobbling it up, despite the sanctions. Recently, Iran began ramping up its oil production and exports, especially to China, hoping that the new U.S. administration will lift sanctions.
This month, Iranian oil shipments to the province of Shandong—the home of most of China’s independent refiners—have increased so much they are causing port congestion, Bloomberg reported earlier this week, citing traders and analysts.
Iranian oil sells at a deep discount because of the U.S. sanctions, which makes it highly desirable by Chinese refiners looking for a bargain. In fact, Iranian oil exports to China could this month jump to over 850,000 bpd, according to a Kpler analyst cited by Bloomberg.
Iran’s oil production rose by 35,000 bpd in February, according to the latest Monthly Oil Market Report by OPEC. Fitch Solutions recently forecast that exports of crude could rise by 6.8 percent this year if the United States rejoins the so-called Iran nuclear deal. By 2022, exports could double compared with 2020 levels, the agency also said, if sanctions are lifted.
“The prospects for the Iranian oil sector have brightened significantly following Joe Biden’s victory in the U.S. presidential election on November 3. President Biden has indicated that he will seek to re-enter the U.S. into the Iranian nuclear deal, paving the way for a roll-back of secondary sanctions and recovery of around 2.0 million barrels per day (bpd) in oil production,” Fitch Solutions said.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com