Oil minister Javad Owji has reaffirmed President Ebrahim Raisi's claim that Iran is exporting 40 percent more oil since August and is able to receive the money.
In a tweet Owji said on Saturday, “The honorable President of the Republic correctly pointed out” that oil exports have increased by 40 percent during his term. He added that in addition to selling more oil at higher prices, Iran is now able to recoup the money. Owji and other officials refrain from saying how much oil is exported and how much foreign currency the government receives. The information is considered state secret amid US sanctions.
Iran’s oil exports dropped to around 200,000 barrels per day in 2019 when the United States imposed full sanctions, revoking limited import waivers it had offered to some countries. But in late 2020, as former US President Donald Trump lost the election Tehran increased its sales through illicit channels. China is the biggest buyer, with shipments disguised as exports from other countries.
Independent industry sources have confirmed that Iran was exporting around 600,000 bpd in 2021, but whether the Raisi government has increased exports on top of that quantity is not clear. Apparently, he is trying to take credit for something that was already taking place before he assumed office.
But if there is a grain of truth in his claim, the question arises as to why China decided to increase its purchases from Iran when the hardliner president assumed office last August, and not earlier.
A similar development took place with Covid-19 vaccines last year, when former President Hassan Rouhani’s government was complaining that China was not delivering sufficient doses and Iran was seriously lagging in nationwide vaccinations.
The vaccine flow suddenly increased in August as Raisi assumed office and with tens of millions of doses supplied by China “the revolutionary government” was able to inoculate the majority of the population.
If Raisi’s claim that his government has increased oil exports by 40 percent is true, it would mean only one thing – Beijing has allowed more illicit imports of Iranian oil. The question then becomes if China is indirectly influencing Iran’s internal politics.
Another factor in China buying more Iranian oil since late 2020 is President Joe Biden’s decision to negotiate with Iran and revive the 2015 nuclear agreement that Trump abandoned in 2018. The US administration has not taken any visible action to clamp down on Iran’s additional oil exports to China amid negotiations in Vienna. This might have given Beijing the opening it needed to buy Iranian oil at a discount.
In December, the official government newspaper Iran Daily wrote that Tehran is offering such large discountsthat buyers are tempted to take the risk and circumvent US sanctions.
Another interesting point highlighted by both Raisi and Owji is that Tehran is able to receive the cash for its oil exports. Again, this can be just a claim to take credit and instill optimism in the beleaguered local market, or to show the Biden Administration that it is not in a dire economic situation.
Given US banking sanctions on Iran, receiving billions of dollars in foreign currency is highly unlikely, unless the US is looking the other way and money reaches Iranian bank accounts through intermediaries.
Companies and banks in the United Arab Emirates could be involved both in disguising illicit Iranian oil shipments and repatriating the money, possibly with substantial profits. In December US sent a delegation to the UAE to discuss tightening sanctions enforcementbut little information has emerged since then.