October 17, 2018 | Policy Brief

Tehran’s Oil Exports Rose Slightly in September, Halting Sharp Decline

October 17, 2018 | Policy Brief

Tehran’s Oil Exports Rose Slightly in September, Halting Sharp Decline

Bloomberg has reversed its prior assessment that Iranian oil exports continued to plunge in September, halting – but not reversing – the sharp decline that began after the U.S. announced in May it would reinstate sanctions. Overall, Iranian exports have fallen by 800,000 barrels per day (bpd), or approximately 30 percent, since the U.S. decision.

On October 1, Bloomberg reported that Iranian exports fell to roughly 1.72 million bpd in September, a reduction of 260,000 bpd as compared to August. The initial figure represented an overall loss of 1.1 million bpd from a high of 2.82 million bpd in April, before the U.S. withdrawal from the Iran nuclear deal, which triggered the return of sanctions.

Several days later, the Tanker Trackers analysis group asserted that Tehran’s efforts to conceal the location of its tankers might have prevented initial estimates from accounting for as much as 300,000 bpd of Iranian exports. According to Tanker Trackers, Iranian exports actually rose about one percent in September to just over two million bpd.

This conflicting analysis drew on satellite imagery to locate Iranian tankers that sought to conceal their position by turning off their Automatic Identification System (AIS) transponders. Specifically, satellite imagery enabled Tanker Trackers to identify three supertankers that departed from an Iranian export terminal in the Persian Gulf, but whose whereabouts are unknown.

Earlier this week, Bloomberg published a revised estimate for the first half of September, matching the two million bpd figure from Tanker Trackers. Despite the similarity of these figures, substantial disparities remain between the two groups’ estimates for exports to specific countries, especially China, India, and Turkey.

Partial data from the month in progress suggest Iranian exports continue to recover. The latest estimate from Tanker Trackers is that Iran exported 2.2 million bpd of oil in the first half of October. This increase reflects a surge of deliveries to China, India, and Syria, which more than compensate for the loss of markets in Europe.

The overall reduction in oil exports since May has cost the regime billions of dollars at a time when Tehran is desperate for hard currency as the rial plunges and inflation continues to spiral out of control. If illicit means of concealment have enabled Iran to prevent further losses, the U.S. government should take appropriate countermeasures. First, the U.S. may need to employ its own intelligence and surveillance assets to monitor Iran’s exports. Second, if Iranian exports are rising, the U.S. will need to demonstrate additional resolve to enforce sanctions, lest it convey to Iran’s potential collaborators that there is little downside to buying Iranian oil.

In that regard, the U.S. should work with its allies to hold Iran accountable for illicit concealment measures such as disabling AIS, whose continual use is mandated by international law. Such behavior is dangerous as well as illegal; earlier this year, an Iranian tanker that had turned off its AIS tracking system collided with another vessel in the East China Sea, killing all 32 members of the tanker’s crew.

Finally, the U.S. should remind third-country port authorities of their responsibility to ensure compliance with AIS rules and other aspects of maritime law. Those ports should refuse entry to Iranian operated vessels if they remain non-compliant. The U.S. Treasury may also consider imposing sanctions on individual vessels, which would render insurers and other service providers liable to designation for transacting with the vessels’ owners.

Should the United States permit Iranian tankers to operate freely, it would give Iran the means to resist the renewed sanctions regime at the heart of U.S. policy.

Andrew Gabel is a research analyst at the Foundation for Defense of Democracies. Follow him on Twitter @Andrew_B_Gabel.

Follow FDD on Twitter @FDD and follow FDD’s Center on Sanctions and Illicit Finance @FDD_CSIF. FDD is a Washington-based, nonpartisan research institute focusing on national security and foreign policy.


Iran Iran Politics and Economy Iran Sanctions Sanctions and Illicit Finance