Iranian Oil Exports Soar as Sanctions Collapse

Iran to get ‘well more than $20 billion’ in sanctions relief

Oil pumps in the Persian Gulf / AP
February 14, 2014

Iranian oil exports soared in January, hitting new highs just months after the United States consented to billions of dollars in economic sanctions relief under the interim nuclear deal.

Exports of Iranian crude oil jumped to 1.32 million barrels, up from December’s high of 1.06 million barrels, according to data from the International Energy Agency.

The spike in exports—mainly to Japan, China, and India—has helped Iran’s once-ailing economy stabilize and decrease inflation.

Iranian oil exports have steadily risen since negotiations with the West restored confidence in Tehran’s economy. The increase runs counter to a promise by the Obama administration that "Iran's oil exports will remain steady at their current level of around 1 million barrels per day."

The significant rise in oil exports has led some experts to accuse the Obama administration of misleading the public about the amount of sanctions relief provided under the interim nuclear deal.

While the White House said Iran would receive no more than $7 billion in relief, these experts say that the rise in oil exports and other economic spikes will give Iran "well more than $20 billion."

"These numbers … cast doubt on the accuracy of the administration's estimates for sanctions relief," former Ambassador Mark Wallace, CEO of the advocacy group United Against Nuclear Iran, said in a statement. "The $6 or $7 billion estimate does not take into account the tens of billions of dollars Iran will reap from increased oil sales."

"It is becoming more and more evident that the Geneva deal provided Iran with disproportionate sanctions relief, in exchange for far less significant concessions regarding its nuclear program," Wallace said.

Iran currently has some 30 million barrels of crude oil stored on tankers, "including 6 million barrels in vessels off China’s coast," Iran’s state-run media reported. It produced 30,000 more barrels in January, bringing its total to around 2.78 million, according to the report.

As international markets continue to open their arms for Tehran, South Korea is reportedly set to become Iran’s next oil customer.

Two Korean banks are gearing up to make payments to Iran for its crude oil, the country’s Fars News Agency reported. South Korea would join China and Japan as top importers of Iranian crude.

India is also moving to become one of Iran’s top oil importers. It announced that it would purchase oil exclusively from Tehran through 2015.

"We will only buy crude oil from Iran in 2014-2015 period if the current sanctions on the insurance coverage of tankers are lifted," an official from India’s Hindustan Petroleum Corp Ltd (HPCL) was quoted as saying by Fars.

HPCL, like other global companies, had ended its business relationship with Tehran due to international sanctions making it illegal for such business to occur.

However, the economic landscape is shifting as the Obama administration agrees to reverse sanctions in return for Tehran’s cooperation on the nuclear front.

India, for instance, is looking to boost its business dealings in other areas of the Iranian marketplace.

Iran is still set to cash in on $4.2 billion in cash infusions courtesy of the Obama administration, which began unfreezing these cash assets last month. Iran will receive some $450 million on March 1 and another $550 million on March 7 under the deal.