Oil minister Owji giving a tour to President Raisi at a gas plant on March 31.

Iranian Officials Insist Oil Output And Exports Increased

Saturday, 04/02/2022
Mardo Soghom

Chief Editor of Iran International English website

President Ebrahim Raisi and his oil minister this week repeated claims that Iran has increased oil output and exports amid continuing United States sanctions.

President Ebrahim Raisi in a speech on Thursday declared that oil exports have reached the pre- 2018 levels, when former US president Donald Trump withdrew from the nuclear deal with Iran and began imposing sanctions on Iranian oil exports.

If Raisi meant that Iran is shipping two million barrels a day like it did in 2017, it would mean observers of the global oil trade have underestimated Iran’s illicit exports by almost 100 percent. Various estimates in recent months have ranged between 750,000 to one million barrels a day.

Raisi who is under a lot of pressure to improve the battered economy is using media under his government’s control and every public speech to claim economic successes.

The policy of claiming economic successes could also be a tactic to persuade the United States that its sanctions are ineffective and Iran can afford not to sign a nuclear agreement negotiated in Vienna if Washington rejects its demands.

Petroleum Minister Javad Owji also told Shana news agency on the same day that “the capacity of oil production has returned to pre-sanction period” reaching to more than 3.8 million barrels per day.

Workers in Iran's natural gas South Pars field protesting lack of attention to their wage demands. March 23, 2022

The key word in Owji’s remark is ‘capacity’ which could substantially differ from actual production. This claim was made earlier by other oil ministry officials. He did not give an exact figure about exports and it is not clear if president Raisi mixed up ‘production’ with ‘exports’ when he said Iran has reached the pr-sanctions level.

Domestic critics of the government have pointed out that the president’s claims of more oil revenues and economic growth are simply due to higher oil prices in recent months, and not any breakthrough in Iran’s economic fundamentals.

Average oil price in the first 7 months of 2021 was around $60 per barrel, while in the following 6 months (August-February) it was about $80. Raisi assumed office in the beginning of August. Following Russia’s invasion of Ukraine on February 24, prices shoot up well above $100.

During Donald Trump’s presidency, Iran’s clandestine oil shipments hovered around 200-300 thousand barrels pd but they picked up right before the US presidential election in November 2020 and steadily increased in 2021.

President Joe Biden’s administration apparently decided not to strongly enforce the sanctions, violated mainly by China, which has been buying the bulk of Iranian shipments.

The director of National Iranian Oil Company, Mohsen Khojasteh when asked a question by local media on Friday if exports increased because of lax enforcement by the United States, insisted that Iran was able to increase production capacity and exports despite sanctions.

Khojastreh claimed that the oil ministry made a $700 million investment since Raisi assumed office and revived production at 750 oil wells. He added that export of oil and other hydrocarbon products increased because Iran was able to find new customers but did not provide any details. Tehran regards such information as strategic secrets.

More exports and higher prices, however, have done little to visibly improve Iran’s economic indicators. Inflation continues to hover around 40 percent, with prices for food and other essential goods increasing to unprecedented levels. The government struggles to pay salaries and pensions, with no major proven investments in infrastructure, beyond general declarations of accomplishments.

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