There has been no real change in the sanctions against Iran’s oil industry, no extra wavers of allowances. Yet, Iranian oil revenues are rising constantly, ever so much over the last three to four years. Rumors over the IRGC taking large chunks of the oil industry have turned into legally known facts. Iranian oil deals go through IRGC channels in more than 50%, pushed to regular customers like China with discounts of up to 5$ per barrel, in direct or indirect involvement of proxy countries, mainly Iraq and up until recently, Syria. European customers get even a greater discount, as the chances of US designation are higher and allegedly more effective.
IRGC didn’t stop at that; better, this was only one step further for the IRGC. The handling of foreign operations in Iran changed profoundly since the IRGC took over many accreditations for military attaché in various countries all over the world. Apart from their local effort to promote deals of advanced military technologies, these guys are in charge of opening private bank accounts for IRGC officials, maintaining them, and monitoring the constant flow of money. That is the main reason why military attachés are considered high ranking as the ambassador himself, and in some cases even higher.
Once IRGC took over the better part of the Iranian oil industry, the connections of the military attachés in various countries with the local industries and decision-makers became instrumental. They could and would promote the deals, using their capabilities and connections to circumvent weapons embargos for the benefit of oil deals. To make this go better down their throats, the military attaché leaves much of the revenue in the customers’ country, opening bank accounts in the name of high IRGC and regime officials. This way many of the deals go undetected as there is no correlation between the supply and the international money transfers.
Still, the oil industry is putting out more products than can be sold even by the best traders in the Middle East, and it has done so for years. That has become a major problem and China has provided the best solution, at that time for all sides involved. Most of the surplus oil is stored in Chinese ports, mainly in Dailan. For China, this means instant access if needed, for Iran it means that they have where to put it safely while keeping the tanker fleet free to move.
Two things they didn’t take into account, and that could become crucial in the near future. First and foremost is the greed of the upper echelon of the IRGC. People who were part of the initial rise of this organization, who fought the battles for survival and paid a heavy price, believe now that this is the time to reap the fruit of their labor. With that in mind, they prefer the deals with the West, where the money goes in high percentages into their private bank accounts, over the utilization of storage oil in China. This on its own has grown into a financial disaster. The Chinese ports do charge for storage, and as this procedure has been thriving since 2018, especially after President Trump left the JCPOA, the fees have now reached 1.1 billion dollars, at least half the value of the goods. Secondly, as now the same president returned to the scene, the stored oil in Dalian could be directly sanctioned and the assets frozen. By the end of the presidency, this could render this equity futile, or even a burden. Iran is struggling to sell this oil now at dump prices, but everyone knows what’s going on in the market, so the number of takers is minimal.
As if this was not enough, the IRGC found yet another way to profit from the oil revenues, this time selling fuel and claiming it had been smuggled out of the country. Various reports about fuel smuggling from Iran have been discussed on numerous levels of government, social media, and trade associations for several years now. Even President Pezeshkian was enraged by the numbers, varying from at least 20 million liters per day and up to 100 mil. liters/day.
There seems to be a major difference between the way of handling within Iran and the way that international journalism handles the matter. When it comes to illegal Iranian activities, there is always one major Iranian player, whose expertise is unsurmounted in smuggling, stealing, and circumventing sanctions. There is no doubt about their capabilities and their incentive, diverting Iranian resources directly into IRGC projects, mainly in proxy countries.
The IRGC was first to blame border smugglers, showing rows of Nissan trucks moving a couple of thousands of liters each. The thing is, the numbers don’t add up, even for the lowest estimates, and the fuel shortage is outrageous, especially as winter is already hitting the homes of the population.
Such a vast volume to be bought cheaply on the open market, transported in small containers to and across the border would need a large number of vehicles, a network of information and distribution, and good connections, let alone the initial money to invest. On the other hand, the IRGC does this easily with its existing network, without even touching the borders.
Meanwhile, the IRGC provides the essentials for cross-border fuel smuggling in small numbers, just to have someone to blame.
It won’t be long before the government and even the presidency will understand that the IRGC will bring the downfall of the Islamic revolution, and there is nothing they can do about it. These days, as the regime is at an all-time low, many interpret the IRGC activity as “the rats are the first to leave the sinking ship” and on their way out, cash in on the last financial reserves.
