Booming Iranian Oil Trade in the Spotlight after Trump Win
Donald Trump’s impending return to the White House has brought Iran’s booming oil flows back into focus — as well as the possibility that the president-elect will once again try to crush them.
Back in 2019, Trump led the US in a so-called maximum pressure campaign designed to choke off the Islamic Republic’s exports and, with it, Tehran’s access to petrodollars. Under Joe Biden’s leadership, however, flows have boomed again with an emphasis on policies that cause friction to Iran’s shipments but don’t curtail them.
Trump’s return to the Oval Office from January — along with rhetoric during his campaign that he would be tough on Iran — raises the question of whether he’ll target those flows again. To circumvent the US measures, Iran has increasingly relied on a fleet of tankers and trading practices that are outside of the West’s oversight.
“I think this will have a material impact on Iranian oil exports,” Ben Cahill, energy markets and policy director at the University of Texas, said of Trump’s return. “It’s hard to put the genie back in the bottle entirely after the black market has developed for years and sanctions evasion and obfuscation has advanced. But I suspect Trump will lean on China.”
Flows Boom
Cahill estimates that Iran’s flows could be curtailed by between 750,000 barrels a day and 1 million barrels a day. If that were to prove accurate, it would take them back down to around the 1 million-a-day mark last seen during the early stages of Covid.
Iran’s oil exports averaged 1.7 million barrels a day in the third quarter of this year, almost two-and-a-half times as high as they were in second half of 2019, according to data from TankerTrackers.com Inc., which has been monitoring the nation’s secretive shipments using satellite data for years.
With widespread expectations that oil and diesel markets will be in surplus next year, the incoming president could also have room for maneuver.
Bob McNally, president of Rapidan Energy Group, says Trump will target ports that take Iran’s oil, and make the Middle East country a priority in his talks with top buyer China.
A hard line sanctions policy has the potential to disrupt as much as 1.3 million barrels a day of Iranian crude flows, Rapidan estimates.
A shift in global dynamics since Trump’s last term may also require the next president to recalibrate his approach to relations with Saudi Arabia, said McNally. The de facto leader of OPEC struck an agreement in 2023 to normalize relations with Tehran for the first time in seven years, and ties have become less tense in recent years.
“Iran policy is the most important consequence of the election,” McNally said Wednesday in Abu Dhabi. “The vote between Harris and Trump was literally up or down on Iranian supply. Trump is going to crack down on Iran from day one as one of his biggest priorities.”
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