Iran’s Oil Export Strategy Amidst Tensions

Despite ongoing conflict with Israel, Iran is actively working to sustain its crude oil exports, a crucial revenue source. According to reports from two vessel tracking companies, Iran is employing strategies such as loading tankers individually and repositioning its floating oil storage closer to China.

The recent escalation between Iran and Israel has presented new obstacles for Iran, which relies on a network of tankers with obscured origins to bypass US sanctions that were reimposed in 2018 due to its nuclear program.

As the third-largest producer within OPEC, Iran primarily exports crude oil to China. Vessel tracking data indicates that the conflict with Israel has, thus far, had minimal impact on these shipments.

Data from the analytics firm Kpler reveals that Iran’s crude oil loadings have reached 2.2 million barrels per day this week, a peak for the last five weeks.

Energy infrastructure in both Iran and Israel has been the target of missile exchanges, including Israel’s Haifa oil refinery and Iran’s South Pars gas field. However, Kharg Island, Iran’s main crude exporting hub, has remained untouched.

Homayoun Falakshahi, who is the head of crude oil analysis at Kpler stated that all loadings from Kharg Island this week occurred from the eastern jetty. Kharg Island is situated approximately 30 km off Iran’s southwest coast, deep within the Persian Gulf.

Strategic Jetty Usage

Falakshahi suggested that the National Iranian Oil Co (NIOC) might consider the eastern jetty less exposed compared to the primary jetty located on the western side, which faces open waters.

Currently, large oil tankers are approaching Kharg Island individually, leaving the western jetty unused for several days. Additionally, approximately 15-16 Iranian tankers are dispersed throughout the Persian Gulf area.

The International Energy Agency (IEA) reported that Iranian oil exports have remained stable at around 1.7 million barrels per day this year, despite US sanctions imposed on Chinese customers since March.

Floating Storage Adjustments

To mitigate potential disruptions for buyers, Vortexa, another ship tracking firm, reported that Iran has relocated a portion of its floating storage fleet, holding about 40 million barrels across 36 vessels, closer to China.

Vortexa indicated that approximately ten tankers, carrying roughly 8 million barrels of Iranian crude, are now stationed directly off the coast of China. These tankers were previously located near Singapore, where an additional 20 million barrels are stored.

At the beginning of the month, the remaining approximate 12 million barrels were located in the Persian Gulf; however, their current location remains unknown, according to Vortexa.