Iran will earn $36 billion from oil exports in 2022 with shipments mostly to China, Fars news website affiliated with the Revolutionary Guard reported Sunday.

In an article arguing that Iran can earn as much by circumventing United States’ sanctions as it would if it signed a nuclear agreement to lift those sanctions, the website compares annual oil income during the former president Hassan Rouhani’s two terms, with current president Ebrahim Raisi’s 11-month-old administration.

It argues that during Rouhani (2013-2021) when the Joint Comprehensive Plan of Action (JCPOA) was signed with world powers in 2015, the average annual oil export income was $37.5 billion, but it had significantly dropped since 2018 when President Donald Trump exited the agreement and imposed oil sanctions.

However, exports picked up in 2021, the website says, trying to give the credit to the Raisi administration of hardliners.

Exports had already begun to increase around the time of the 2020 US presidential elections and climbed further when the Biden administration decided to launch talks to revive the JCPOA and failed to rigorously enforce the Trump-era sanctions.

The article tries to argue that not reaching an agreement with the US will make no difference in oil exports and Iran can boost its revenues to $50 billion. But it conveniently fails to mention that most of the recent gains claimed are due to higher oil prices, not the volume of exports.

Without sanctions, Iran’s oil revenues would at least double, as it would export at least two million barrels per day instead of the current estimated shipments of under one million. The country would also not be forced to offer $20-30 discount per barrel and spend more money to market the sanctioned oil. It is well known that various middlemen and brokers make large profits acting to disguise Iran’s shipments.

It is beyond doubt thatIran’s oil shipments and profits have increased since November 2020, as Fars also shows in its report, but the amount of revenues can be anyone’s guess. The discount Iran offers and profits it has to share with middlemen remain secret. Moreover, some observers believe China is not paying for all the crude it receives in cash and some is repaid in kind, with shipments of other goods.

Indirect evidence for this is the deteriorating financial situation of the Raisi administration, as the practice of paying salaries late continues amid a 50-percent inflation rate and the national currency has fallen to a historic low.

Raisi was forced to eliminate an annual food import subsidy of $15 in early May, which led to a huge jump in prices, leading to protests and political instability.

Iran has been shipping most of the illicit crude to China, offering large discounts especially since Russia came under sanctions after its February invasion of Ukraine and began shipping its unsold oil also to China. Reports in early June indicated that Iran’s exports to China halved in May because of Russian competition.

The last round of talks to resolve differences with Washington and finalize the revival of the JCPOA failed this week in Doha. The US accused Iran of introducing “extraneous” issues in the talks and remaining undecided on core issues.

A nuclear agreement would not only boost income form oil and other exports, it would also gradually allow Iran to attract some investments, especially to revitalize its oil and natural gas industry, worn out during long years of sanctions.

Source » iranintl