Can Trump really cut Iran’s oil exports to zero?
Dalga Khatinoglu
Oil, gas and Iran economic analyst
The economic impact of the so-called maximum pressure on Iran will be significant, with a zero-exports goal set by US president Donald Trump.
Oil, gas and Iran economic analyst
The economic impact of the so-called maximum pressure on Iran will be significant, with a zero-exports goal set by US president Donald Trump.
On Tuesday, Trump signed a directive reinstating the "maximum pressure" policy from his first term, warning of "catastrophic" consequences if Tehran doesn't reach a deal on its nuclear program. His goal of eliminating Iran’s oil exports is particularly alarming for Tehran, as it would eliminate nearly half of the government's revenues during a seven-year economic crisis.
In its first move, the US Treasury Department on Thursday imposed sanctions on an international network, alleging that it has facilitated the shipment of Iranian oil to China. In a coordinated step, the Treasury and State Departments announced sanctions targeting networks involved in shipping Iranian oil to China. The measures cover multiple countries, including China, India, and the United Arab Emirates, and affect several vessels linked to Iran's oil exports.
While the impact of this order, if fully implemented, would be significant for Iran’s oil exports, there is doubt as to whether it will actually reduce the oil exports to zero or to the levels seen in 2020, the final year of Trump's previous presidency. In 2017, before US sanctions were imposed, Iran exported 2.5 million barrels per day (bpd). By 2020, this figure had plummeted to around 350,000 bpd.
As Joe Biden took office in 2021, Iran’s oil exports rebounded, peaking at nearly 1.9 million bpd in the summer of 2024. After President Biden administration’s imposed sanctions on dozens of tankers involved in smuggling Iranian oil, exports dropped by 500,000 bpd in the final quarter of 2024.
Yet, in January this year, exports once again surged to 1.6 million bpd.
The ship-tracking company Tanker Trackers told Iran International that the recent fluctuations in Iran’s oil exports are typical, noting that such variations are common. "We saw a similar drop during the final months of Biden's presidency, followed by a rebound. There's nothing unusual about it. The average for crude oil exports over the past year is 1.572 million barrels per day, and since January, it has been 1.567 Mbpd. So, it's too early to draw conclusions," the company said.
Regarding Iran's logistical challenges, Tanker Trackers explained, "There are policies, and then there are logistics. We’re not yet convinced that Iran’s oil exports will drop to the levels seen in May 2019 (439 Kbpd), mainly because there wasn’t an extensive global dark fleet available back then, unlike what we have today."
The United Against Nuclear Iran (UANI) organization, a non-profit group dedicated to preventing Iran from acquiring nuclear weapons, in collaboration with tanker-tracking companies, has identified nearly 400 vessels involved in smuggling Iranian oil, collectively known as the "dark fleet." However, fewer than half of these vessels have been sanctioned.
These tankers attempt to smuggle Iranian oil covertly by turning off their automatic identification systems (AIS).
Currently, China is virtually Iran’s only oil customer. However, it does not purchase oil directly from Iran. Instead, Iranian oil is sold through intermediaries and changes ownership documentation, being rebranded as oil from Iraq, the UAE, Oman, and especially Malaysia before being sold to China’s small, independent refineries.
Tanker Trackers noted that China has already stated repeatedly that importing oil is a matter of national security, regardless of the source.
Meanwhile, the energy consultancy firm Wood Mackenzie told Iran International that the recent drop in Iranian crude oil exports is due to a combination of tighter sanctions on tankers imposed by former President Biden and China’s Shandong port declaring that sanctioned vessels will not be allowed to discharge their cargoes to independent refinery clients.
Wood Mackenzie said that given the recent US sanctions on China and Beijing’s retaliatory tariffs, we do not expect China to comply with Trump’s ‘maximum pressure’ policy on Iran.”
Senior commodity analyst Homayoun Falakshahi from Kpler, a commodities intelligence firm, told Iran International that Iran’s daily oil exports stood at 1.66 million bpd last month. However, he predicted that due to the reinstatement of Trump’s maximum pressure policy, exports could fall to around 500,000 bpd in the coming months.
He added that the extent of this decline depends on Beijing’s cooperation with US sanctions.
China and the US conduct $750 billion in annual commodity and service trade, heavily favoring China. However, Trump recently ordered an increase in tariffs on Chinese imports, prompting Beijing to threaten retaliation.
While China has repeatedly stated that it does not recognize US unilateral sanctions against Iran, its recent ban on US-sanctioned vessels docking at its ports suggests that it takes Washington’s sanctions somewhat seriously.
Iran’s share of China’s oil imports exceeds 10%, with an annual value of around $40 billion. China is also the largest buyer of sanctioned Iranian goods, including metals and petrochemical products. Additionally, a significant portion of Iranian refined petroleum products, such as fuel oil (mazut) and liquefied petroleum gas (LPG), is shipped to China.
Iranian customs data shows that, excluding crude oil, the country exported $12.3 billion worth of goods to China and imported $14.4 billion from China in the first ten months of the current Iranian calendar year (which began on March 21, 2024).
