IWP professor Dr. Sara Vakhshouri visited the Capitol Crude podcast by S&P Global to discuss the implementation of American sanctions against Iranian oil exports in an episode entitled “Tankers, sanctions and tensions: How much oil is Iran still exporting?”.
Following the Trump administration’s decision to end waivers for countries that import Iranian crude oil, Tehran has experienced severe drawbacks. Dr. Vakhshouri noted that figures of Iranian crude oil exports depend heavily on semantics. Although Iran has not earned any income from crude oil shipments and no new purchases occurred, notable importers – China and India – still receive crude oil shipments. Dr. Vakhshouri asserted, however, that these shipments are debt repayments from previous negotiations. In addition, exact figures on the amount of Iranian crude oil exported and delivered is dubious because of Tehran’s attempts to conceal transports.
Dr. Vakhshouri discussed new methods from Iran to maintain crude oil-based income for the regime. Tehran may rely on crude oil pre-sales, rather than explicit contract negotiations, to bypass American sanctions. Funds are necessary for various goods, including food and medicine, in Iran. An oil-for-goods barter would involve Iran purchasing goods and reimbursing the opposite party with crude oil directly, instead of hard currency. Tehran considers such an approach as viable to preserve dwindling Iranian market share, while the State Department remains seldom likely to opine on the legality of the matter.
Dr. Vakhshouri then considered the likelihood of whether European countries would risk sanction violations to engage in crude oil pre-sales with Iran. Her assessment is negative, much to the chagrin of Iranian ambitions. Other pre-sale agreements are similarly unlikely from China, India, and Russia. Dr. Vakhshouri concluded that, save for humanitarian assistance, American sanctions will continue to severely inhibit Tehran.
Sara Vakhshouri is founder and president of SVB Energy International – a global strategic energy-consulting firm in Washington DC and Dubai, UAE. At IWP, she teaches a course on “Energy Security and the New Geopolitics of Energy.”