Iran FM Warns Of Harsh Response If Israel Retaliates To Onslaught

Oil production increased by only 18,000 barrels per day in the first quarter of the year to 3.188 million barrels per day (mb/d), compared to the last quarter, indicating a mere 0.5% growth in quarterly production, according to OPEC.

The country’s oil production growth has slowed dramatically since last summer.

Due to the sale of tens of millions of barrels from floating storage, Iran's oil exports increased significantly in 1Q24 to 1.5 mb/d, according to estimates by Kpler which provides real-time data on global commodity movements.

After the United States imposed sanctions on Iran’s oil exports in 2018, the country's oil exports declined from 2.6 mb/d to 330,000 barrels by late 2019 – leading to the stockpiling of about 110 million barrels of unsold oil on both water and land.

During President Joe Biden’s administration, however, the Islamic Republic was able to increase oil exports to its only customers: China and Syria.

Last year for instance, Iran exported about 1.3 mb/d of crude oil and gas condensate, 48% more than the previous year – of which 95% went to Chinese independent small refineries, called “teapots”.

A senior expert at Kpler told Iran International that the volume reached 1.5 mb/d in January-March 2024.

Kpler’s data indicates a significant increase in Iran’s oil exports during the first half of 2023, followed by a slight decline in the latter half of the year. Export growth then picked up again in the first quarter of 2024, although OPEC data suggested only a marginal increase in production levels.

The significant quarterly increase in exports by 140,000 b/d, despite a production growth of only 18,000 barrels in 1Q24, can be attributed to Iran selling more than 16 million barrels from floating storage during January-March 2024.

The process of oil transferring from Iran to China typically takes about three to four weeks.

According to Kpler’s statistics, Iran's floating oil storage decreased from 26.5 million barrels in early December 2023 to 10 million barrels in early February 2024.

Iran’s floating storage from June 2022 to mid-April 2024 (mb):

Source: Kpler

The statistics show that Iran's floating storage level doubled to 30 million barrels in mid-April, compared to the level in early March.

Although there are no statistics available about Iran’s oil production and export levels in April, the significant increase in floating oil levels indicates that Iran's oil exports likely declined during that month.

Oil revenues

Iran's oil export volume increased by 44% in the last Iranian fiscal year, ending on March 19, despite a 17% decrease in global oil prices. However, the country’s customs statistics indicate that oil export revenues only grew by 8% during this period.

According to Iranian customs data, the total value of oil and oil products (including mazut) exported by Iran amounted to $36 billion in the last fiscal year.

But, considering Iran's export levels of 1.3 million barrels per day (mb/d) of crude oil and gas condensate, along with 0.2 mb/d of mazut, and factoring in global oil prices, Iran's total oil export revenues should have exceeded $44 billion.

This suggests that approximately 19% of Iran's oil revenues were lost due to factors such as expenses related to bypassing US sanctions, including middlemen costs, ship-to-ship operations, and direct discounts offered to Chinese refineries.

Iran offered Chinese “teapots” approximately $13 per barrel in 2023 to maintain its market share, Reuters reported.

Additionally, the head of the Budget and Planning and Auditory Commission of the Iranian parliament stated on April 13 that Iran imported $2 billion worth of gasoline during the last fiscal year to compensate for fuel shortages.

Iran began importing gasoline in March, primarily from Russia and neighboring Southern countries.

Following Israel's targeting of the Iranian consulate in Damascus on April 1, Tehran and Washington exchanged messages aimed at preventing Iran's "legitimate response to the Zionist regime," according to Nasser Kanaani.

More than 350 drones and missiles were launched by Iran in response to an alleged Israeli airstrike that killed seven officers of the Islamic Revolutionary Guard Corps (IRGC), including two senior commanders.

Nasser Kanaani described Iran's action as "necessary and proportionate" and denied any prearranged agreement between Iran and any other country prior to the attack.

Blaming the US complicity for Israel’s attack on April 1st, Nasser Kanaani said: “The Zionist regime would not have had the courage to act against the Iranian consulate without the support of the US.”

According to the White House's top national security spokesperson, John Kirby, on ABC's "This Week" on Sunday, the United States will continue to assist Israel in defending itself but does not want to go to war with Iran.

Moreover, US officials stated on Sunday that President Biden informed Prime Minister Netanyahu that the US would not participate in any Israeli counter-offensive against Iran.

Follow developments on Iran International's Live coverage of ongoing tensions between Iran and Israel.

These worries immediately became evident after Iran announced it had launched drones and missiles that would reach Israel within the next few hours. In several cities long queues formed at gas stations.

This as some groups of tens to a few hundreds of government supporters began their “celebrations” in the streets of some cities.

The general public's worries were not unfounded. The rial depreciated rapidly, even before the missiles neared Israel, falling to more than 700,000 against the dollar.

Sources in Tehran tell Iran International that the government has intervened to recover the rial’s lost value by injecting dollars into the market – taking extreme measures, such as threatening exchange bureaus and online traders with closure, to bring down the rates. Consequently, on Sunday the rial managed to recover almost to the level before the attack to around 660,000 to the dollar.

Government supporters celebrating at Tehran’s Palestine Square Saturday evening

The Tehran Stock Exchange also fell by 11,000 points (around 0.5 percent) by the end of trading on Sunday, but recovered by around five thousand points by midday Monday.

Authorities have prosecuted at least two journalists and two newspapers, including Jahan-e Sanat, an economic daily, for expressing concern over the political and economic consequences of escalation in the situation for “threatening people’s psychological security” and urged people to report anyone who takes Israel’s “side” on social media.

“Most people are still spectators of what is happening and are waiting to see what is to happen next. I don’t see patriotism and a common feeling of national pride for the attack which was on a much bigger scale than anyone thought,” Saman, a 47-year-old retailer in Tehran, told Iran International. “Most people I know believed that the ‘hard revenge’ would be limited to an attack on an Israeli embassy in one of our neighboring countries such as Georgia, Armenia or Azerbaijan,” he said.

According to Saman, people’s discussions of the situation are mainly focused on economic matters such as foreign exchange rates, the rise in the cost of housing, food, and higher inflation in general as a result of the current crisis.

This was corroborated by the statements issued by a teachers and a workers union. The Coordination Council of Teachers Associations, which is highly critical of government policies and often organizes protest rallies through its social media channels, said in a short statement on its Telegram channel that it considers the real victims of the Saturday attack on Israel to be the ordinary Iranians whose livelihoods have been affected by the cost of building the missile and drone arsenal used in the attack and its consequences.

“If a full-scale war happens, displacement and poverty will affect the [Iranian] people who are already engrossed in the difficulties of providing the minimums of their living,” the statement which also referred to Israel as “fascist” said.

The Independent Iranian Workers Union (IIWU), an underground union formed by expelled and unemployed workers in 2006, too, described the Saturday drone and missile strike as “adventurism” in a short statement on its Telegram channel and warned that Iran will turn into “scorched earth” if the conflict continues and deepens in scope.

A third group of Iranians, many among whom are supporters of the return of the monarchy, have taken Israel’s side on social media and in messages they have sent to Iran International. Images they have posted on social media show graffiti on the walls in both Persian and English.

One such graffiti reads “Hit them, Israel. Iranians are behind you.” in English. Another one in Persian promises Israel popular protests to topple the regime if Israel retaliates for the Saturday attack.

The reformist opposition has largely avoided criticism of the missile strike, while expressing concern about further escalation.

Mohammad Ali Abtahi, a prominent reformist politician and senior aide to former President Mohammad Khatami, accordingly, welcomed the strike in a tweet but called for an end to the conflict.

“War is a sinister phenomenon. The mission of the world and humanity is to prevent it. Israel attacked the Iranian consulate. The Islamic Republic responded powerfully in defense. For its part, Iran announced that it does not intend to continue [the conflict] and [engage in] war. Now it is the duty of the world to prevent the continuation of this tension. May God protect Iran and Iranians,” he wrote.

Follow developments on Iran International's Live coverage of ongoing tensions between Iran and Israel.

Heshmatollah Falahatpisheh said that while global powers such as the US and UK quickly mobilized to intercept Iran's 350 plus projectiles launched Saturday night, no significant support came Iran's way, not even from Russia, who Iran has provided with support for its war on Ukraine.

“The developments showed that Iran is alone in the region. The world's powers came to Israel's aid to reduce the aerial pressure on Israel, but other powers did not come to Iran's aid even in wartime conditions. Russia was not willing to provide Iran with the necessary equipment in recent times.”

The comments echo Falahatpisheh's earlier criticisms of Russian policies. In January, he accused Moscow of seeking a 'partner in crime' for its actions in Ukraine, referring to Iran's provision of suicide drones to Russia.

Since October 2022, Iran has supplied drones to Russia, which have been used to target infrastructure and civilian areas in Ukraine. These drones, employed alongside missile strikes, aim to overwhelm Ukrainian air defenses.

Despite initial denials from Iran about supplying Shahed kamikaze drones to Russia, the Iranian government eventually acknowledged sending a limited batch before the Ukraine conflict escalated.

Since initiating its invasion of Ukraine in February 2022, Russia has boosted its military cooperation with Iran.

Critics are increasingly expressing doubts about Russia's dependability as an ally to Iran, especially concerning nuclear issues and broader foreign policy concerns.

In November, the Kremlin stated that Russia and Iran are progressing in their relationship, emphasizing their collaboration in "military-technical cooperation."

"The ownership of the ship by Israel is evident," stated Nasser Kanaani, the spokesperson for the Ministry of Foreign Affairs on Monday.

"Given the violation of maritime laws by the concerned ship, it has been directed into the territorial waters of Iran," added Kanaani during his weekly briefing.

On Saturday, Iran's Revolutionary Guard seized a cargo ship that they said was "affiliated with" Israel near the Strait of Hormuz.

The UK Maritime Trade Operations (UKMTO) said the event occurred 50 nautical miles northeast of Fujairah in the United Arab Emirates.

Tasnim news agency, which is close to the IRGC, said that the vessel, MSC Aries, is owned by Israeli billionaire Eyal Ofer.

IRNA labeled Ofer as “the Zionist capitalist.” In November, vessels part-owned by him were targeted by Yemen's Houthi forces, who are aligned with Iran.

In their statement, Zodiac Maritime confirmed the seizure, adding that the “MSC is responsible for all vessel activities including cargo operations and maintenance. Title to the vessel is held by Gortal Shipping Inc as financier and she has been leased to MSC on a long-term basis. Gortal Shipping Inc is affiliated with Zodiac Maritime.”

The US State Department has condemned the seizure and called for the immediate release of the ship and its crew. In a statement of response, Israeli Minister of Foreign Affairs Israel Katz called on the European Union and the entire world to “immediately declare the IRGC as a terrorist organization and sanction Iran now.”

Hours after the seizure Iran attacked Israel with 350 drones and missiles launched on Saturday evening, following an airstrike on April 1 that targeted the Iranian consulate in Damascus and killed several IRGC members, including two high-ranking commanders.