Since October 2024, the Biden administration has imposed stringent sanctions on Iran’s oil sector, resulting in significant disruptions to the regime’s crude oil exports. Notably, shipments to China, which purchases nearly all of Iran’s oil, have decreased by 25%, dropping to 1.3 million barrels per day. Simultaneously, the loading of Iranian oil tankers continues, leaving approximately 20 million barrels of crude oil stranded at sea, primarily near the coasts of Malaysia and Singapore, according to The Economist.
A Shift in U.S. Policy
For most of his presidency, Joe Biden largely overlooked Iran’s expanding oil trade. However, in October 2024, his administration reversed course by blacklisting 55 oil tankers linked to Iran. This constitutes about a third of the so-called “dark fleet,” which clandestinely transports Iranian crude. Data from Kpler suggests that this move marked a significant escalation in efforts to curb Iran’s oil exports.
The U.S. Treasury’s actions come as officials acknowledge the failure of a softer approach toward the Iranian regime. Contributing factors include Israel’s attacks on Hamas and Hezbollah, the fall of Bashar al-Assad’s regime in Syria, and a global oil surplus that mitigates the potential impact of sanctions on U.S. consumers.
Challenges for the Iranian Regime
The Iranian regime faces mounting challenges in sustaining its oil exports. Efforts to replace blacklisted tankers with “clean” ones are hindered by the sheer scale of the global dark fleet, which now predominantly serves Russia’s oil exports. The shortage of available tankers, compounded by recent U.S. sanctions targeting Russian oil shipping, further complicates Iran’s strategy.
Trump’s Potential Approach
With Donald Trump’s return, the U.S. may adopt even more aggressive measures. Reports indicate that his administration is considering pressuring China by threatening sanctions on ports receiving Iranian oil or imposing heavy tariffs until Beijing complies with a ban on Iranian imports.
Such measures could slash Iran’s oil exports by as much as 1 million barrels per day by the summer of 2025. The International Energy Agency (IEA) predicts that the sanctions on the shadow fleets of Iran and Russia will significantly dent their oil revenues. The IEA also notes that about one-third of Iran’s 2024 oil exports—500,000 barrels per day—relied on tankers recently blacklisted by the U.S.
Strategic and Economic Implications
In response to increased sanctions, the Iranian regime has warned of potential retaliatory actions, including targeting Persian Gulf countries or obstructing the Strait of Hormuz—a critical chokepoint for 30% of global crude oil and 20% of liquefied natural gas shipments. Iranian leaders have frequently stated that if they are unable to export oil, they will prevent others from doing so.
The regime’s 2024 budget reflects its reliance on oil revenue, targeting daily exports of 1.85 million barrels, with a third controlled by the Islamic Revolutionary Guard Corps (IRGC) and the remainder by the government. However, U.S. sanctions could severely undercut these projections.
Global Oil Market Scenarios
Analysts foresee two potential scenarios for the oil market:
Optimistic Scenario: A global oil oversupply and spare production capacity could limit price increases to $5-10 per barrel, which would be manageable for U.S. consumers and beneficial for American shale producers.
Pessimistic Scenario: Iranian retaliation, such as disrupting Persian Gulf shipping lanes, could lead to significant market volatility, with far-reaching implications for global energy security.
Conclusion
The Economist concludes that current conditions—a weakened Iranian regime, global oversupply, and reduced demand—create an opportune moment for an economic assault on Iran. The Biden administration’s recent actions, coupled with Trump’s potential strategies, suggest a sustained effort to stifle the Iranian regime’s financial lifelines through its oil trade. However, the situation remains fluid, with potential geopolitical and economic repercussions for both Iran and the global community.
Source » irannewsupdate