(MENAFN- The Arabian Post)
Iran's oil sector is confronting significant challenges as former President Donald trump prepares to re-enter the White House, raising concerns about the future of its oil production and exports. The reimposition of stringent sanctions could severely disrupt Iran's oil industry, which has already been under pressure from previous U.S. measures.
In December, Iran's oil output decreased by 70,000 barrels per day (bpd), totaling 2.85 million bpd. This decline is attributed to ongoing U.S. sanctions and maintenance activities in the United Arab Emirates (UAE). The reduction in Iran's production is part of a broader trend within the Organization of the Petroleum Exporting Countries (OPEC), which saw a collective output decrease of 50,000 bpd in the same period.
Iran has developed a covert fleet of tankers to circumvent sanctions and continue its oil trade, primarily with China. Despite these efforts, more than 100 ships linked to Iranian crude trade since 2018 have been sanctioned, according to Goldman Sachs.
The anticipated return of Trump to the presidency has raised concerns about the future of Iran's oil industry. Analysts suggest that the U.S. may intensify sanctions, potentially targeting Iran's oil trade with China. This strategy could further isolate Iran from the global oil market and exacerbate its economic challenges.
In response to the looming threat of renewed sanctions, Iran is actively seeking to sell approximately 25 million barrels of oil, valued at $1.7 billion, that have been stranded in Chinese ports since 2018. Negotiations with Chinese storage operators are underway to release the oil, but challenges remain, including the need for reprocessing and redocumenting the oil before it can be sold.
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The potential reimposition of strict sanctions by the incoming U.S. administration has raised concerns about the future of Iran's oil industry. Analysts suggest that the U.S. may intensify sanctions, potentially targeting Iran's oil trade with China. This strategy could further isolate Iran from the global oil market and exacerbate its economic challenges.
Despite these challenges, Iran has managed to maintain substantial oil trade using subterfuge tactics, primarily with China. In 2023, Iran's oil exports generated $53 billion, and in 2022, $54 billion. These revenues are crucial for Iran, not only to sustain its economy but also to fund anti-Western militias in the Middle East.
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