Iranian oil exports fell to 938,000 barrels per day in April from 1.86 million in March, Bloomberg reported. This drop occurred just prior to the May 1 expiration of U.S. waivers that permitted five nations to purchase Iranian oil despite comprehensive sanctions. The U.S. is now determined to reduce Iranian oil exports to zero.
Data from TankerTrackers.com mirrors the reporting from Bloomberg, showing that exports during the first three weeks of April had fallen to 1.03 million barrels per day, as compared to 1.91 million in March. Both tracking services often revise their figures upwards as additional data becomes available.
Country-specific numbers from Bloomberg shows that reduced purchases by U.S. allies Japan and South Korea were responsible for more than of the half of the decline in April. Japan imported no Iranian oil in April after buying 108,000 barrels per day in March, while South Korea reduced its April buy to 71,000 barrels per day, down from 464,000 in March.
Strikingly, China reduced its buy from 806,000 barrels per day in March to 267,000 in April. Beijing sharply criticized the U.S. decision to stop issuing waivers, yet its behavior suggests it may be willing to accommodate U.S. interests. Turkish rhetoric was also defiant, with Foreign Minister Mevlut Cavusoglu stating, “Turkey rejects unilateral sanctions and impositions on how to conduct relations with neighbors.” Turkish imports have held constant at about 100,000 barrels per day during the waiver period.
India, which has long been the second-largest importer of Iranian oil after China, imported 333,000 barrels per day from Iran in April, somewhat more than usual. Nevertheless, Indian refiners held back from placing purchase orders for May, and New Delhi says it has a robust plan to secure alternatives to Iranian oil going forward.
Washington’s decision to stop issuing waivers initially led to a modest uptick in oil prices, which mostly receded in the week thereafter, despite predictions of a sharp and sustained increase. Though Saudi Arabia has so far declined to increase its output, it pledged to ensure stability in the marketplace when waivers expire. Rising U.S. oil production has also made markets less sensitive to the loss of Iranian exports.
Tehran relies heavily on oil exports for revenue and hard currency, thus cutting exports to zero comprises an indispensable part of the Trump administration’s maximum pressure campaign. Since the reinstatement of sanctions, Iran has scaled back its defense budget while Iranian proxy forces in Syria are reporting salary cuts. Tehran now faces both spiraling inflation and a recession that the IMF expects to deepen. Street protests continue despite harsh repression.
While the reduction of oil exports in April represents a positive trend, true maximum pressure requires pushing Iranian exports closer to zero. To this end, the U.S. should help India, South Korea, and Japan find alternate suppliers to replace purchases from Iran. Given its previous complicity in massive violations of U.S. sanctions on Iran, Turkey should receive no concessions. With China, the U.S. should seek agreement but be prepared to apply pressure or impose punitive measures if necessary.
David Adesnik is the director of research at the Foundation for Defense of Democracies (FDD), where Andrew Gabel is a research analyst. Both contribute to FDD’s Center on Economic and Financial Power (CEFP). Follow them on Twitter @adesnik and @Andrew_B_Gabel. Follow FDD on Twitter @FDD and @FDD_CEFP. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.