Iran’s oil exports plunge as US sanctions push crude towards $100

Iran’s oil exports have dropped sharply as intensified US sanctions and restrictions on Iranian crude sales squeeze the country’s finances, while renewed tensions in the Middle East push global oil prices towards $100 per barrel.

Iranian crude loadings have fallen to about 260,000 barrels per day this month, down from roughly 1.7 million barrels per day recorded a year earlier, according to commodity analytics firm Kpler.

The sharp decline in Iranian supply has added pressure to global energy markets, particularly amid disruptions to shipping and oil flows through the Strait of Hormuz.

Brent crude, the international benchmark, rose to about $97 per barrel on Thursday before easing to $95.50, according to Oilprice.com, as traders weighed the potential consequences of prolonged disruptions to Iranian exports.

Reuters reported that Washington has intensified efforts to restrict Tehran’s access to international finance and close channels used by Iran to evade existing sanctions.

Three senior Iranian officials told Reuters that the latest measures were placing growing strain on the economy, limiting the country’s access to foreign currency and making it increasingly difficult to secure imports of essential goods.

The squeeze is particularly significant because oil remains a major source of revenue for Tehran. The restrictions have reduced Iran’s ability to sell crude and maintain the networks it has relied on to circumvent sanctions, including front companies, unregistered tankers and smuggling arrangements.

Iran’s broader trade position has also deteriorated. President Masoud Pezeshkian said the country’s trade had contracted by between 25 and 35 per cent, with imports suffering a sharper decline than exports.

The United Arab Emirates has further complicated Tehran’s commercial environment, announcing on August 19 that commercial transactions and financial dealings with Iran had been suspended until further notice.

At home, the economic squeeze has been accompanied by a dramatic fall in the value of the Iranian rial. The currency, which traded at around one million rials to the dollar a year ago, has now weakened beyond 2.2 million rials per dollar.

Inflation has meanwhile accelerated, with official data putting the 12-month average at 69.9 per cent. Food, beverages and tobacco have recorded even steeper increases, with prices rising at nearly twice the overall inflation rate.

Iran’s fuel supply is also under mounting pressure. One senior Iranian source told Reuters that the country has roughly two months of petrol reserves, despite being an oil producer, because its refining capacity is insufficient to meet domestic demand.

The deterioration in living conditions is adding to the pressure on households. Official estimates indicate that average monthly salaries are around $125, while basic household expenses are approximately $450.

The economic crisis is unfolding alongside escalating military confrontation between Iran and the United States. Continued attacks and retaliatory strikes have heightened fears that further disruptions could hit oil production, exports and shipping, potentially keeping crude prices elevated.

For global markets, the extent and duration of the disruption will largely depend on whether tensions around Iran and the Strait of Hormuz ease or develop into a broader threat to regional energy supplies.