Iranian govt increases oil sales to China despite economic sanctions

Despite economic sanctions, inflation, and massive social discontent, the Iranian government has expanded its oil supplies to China at a heavily discounted price, according to the US-based Voice of America (VOA).

Iran does not disclose statistics on its oil sales, according to VOA, but analysts estimate Tehran has increased oil shipments to more than 1.2 million barrels per day in the last three months. Iranian oil reaches the Chinese market via a covert distribution system honed by the Iranian leadership during several decades of Western sanctions.

According to Mahdi Ghodsi, an economist at the Vienna Institute for International Economic Studies, as stated by VOA, “The Iranian regime is now very experienced in bypassing sanctions that it is also doing it for Venezuela or even Russia.”

According to the US Energy Information Administration, Iran can produce more than 3.5 million barrels of oil per day, placing it among the world’s top five crude oil producers.

However, due to increased US sanctions and the economic impact of the global COVID pandemic, Iran’s oil production will reach a 30-year low in 2020.
Due to a lack of official data, it is unknown how much Tehran earns from its oil and gas exports. Annual estimates range from USD 15 billion to USD 30 billion.

“Iran’s oil revenues fell from USD 100 billion to USD 8 billion a year after the U.S. withdrew from the JCPOA [Joint Comprehensive Plan of Action, also known as the Iran nuclear deal],” said Umud Shokri, an analyst of global energy affairs, according to VOA.

The United States withdrew from the JCPOA in May 2018.
After Russia and Saudi Arabia, Iran is China’s third major oil supplier. “China is the biggest winner of the Iranian oil embargo,” Shokri stated.

However, for Iran, the boost in oil sales is far from a long-term solution to the country’s long-standing economic problems. According to VOA, the country has seen persistent inflation, which has driven millions below the poverty line. According to US Special Envoy for Iran Robert Malley, the US is aware of the situation and is continuing to monitor oil flows to China.

According to Al Arabiya Post, Pakistan intends to purchase oil and gas from Iran while avoiding sanctions imposed by the US and other Western countries.

According to Al Arabiya Post, a Middle Eastern digital media company, the Pakistani government believes that if they can sell oil and gas with Russia, another US-sanctioned country, there is no problem in trading with Iran. Furthermore, Iran is providing a better bargain for oil supply. Iran has even offered to pay for the export with wheat, beef, and rice.