Because of the war, all Gulf countries have reduced their oil production and are facing a sharp decline in export revenues. Meanwhile, Iran is earning nearly twice as much oil per day as it did before the US and Israeli strikes, according to an article in The Economist.
It is difficult to determine the exact amount of Iran’s oil exports. The country has been subject to sanctions for several years. Its tankers are now transporting oil more discreetly than ever before, and the war has made it almost impossible to obtain data about the situation in the Persian Gulf, including commercial satellite images.
The Economist’s source claims that Iran now exports between 2.4 and 2.8 million barrels of oil and petroleum products per day. Of which 1.5-1.8 million barrels of crude oil. This is the same as last year’s average, if not more. In addition, oil is now sold at much higher prices, and Iran’s oil infrastructure has become more resilient to military strikes and sanctions. The Economist concludes that Iran is “winning the energy war.”
How do Iranian oil exports work?
Nominally, Iranian oil is exported by the National Iranian Oil Company (NIOC). In practice, says The Economist, in a country starved of hard currency, oil becomes a means of payment, as various factions in power handle its sales, from the Foreign Ministry to the police and religious institutions.
According to Iranian sources, all these structures are under the control of about 20 people. Many of them are linked to the Islamic Revolutionary Guard Corps, which, according to the experts interviewed, controls its own oil fields.
Since the beginning of the war, the Iranian Revolutionary Guard has tightened its control over oil transportation. The Guardian Corps controls communications as well as large parts of the Persian Gulf. It receives information in advance about tankers carrying Iranian oil. Crews are given special access codes, and Iranian Revolutionary Guard boats then escort the ships into the strait.
Iranian tankers, even despite the recent easing of sanctions, are trying to hide the source of the oil in every possible way: they steal data from other ships, forge documents, change their coordinates, and on the high seas off the coast of Malaysia or Singapore, they transfer oil to other ships.
Who buys Iranian oil?
More than 90% of Iranian oil ends up in China. Its clients number about one hundred small oil refineries in Shandong Province in the north of the country. Officially, these companies are independent from Chinese state-owned enterprises (so as not to be subject to US sanctions), but cooperate with them. For example, one such plant, Shandong Shouguang Luqing Petrochemical, which actively buys Iranian oil, has shares in three joint ventures with state-owned companies.
Before the war, independent Chinese refiners bought Iranian oil at a deep discount. Now that advantage has all but disappeared amid declining other supplies from the Persian Gulf, although interest in Iranian oil remains, the Economist writes.
Journalists say China is also involved in a mysterious payment scheme for Iranian oil. Buyers from China and other countries do not pay Iran directly, but transfer the money to one-time credit accounts opened specifically for such transactions in small Chinese banks. These accounts are issued to shell companies, which are often registered by Chinese brokers for a fee. The money is then transferred through a series of other accounts to wherever Iran desires. This system is managed by special units within Iranian companies that control the Ministry of Defense and the Iranian Revolutionary Guard.