 "Iran oil industry booms as sanctions lose bite: Energy output, export at record high")
Iran is higher up on the list of countries that are sanctioned in the world. Despite this, Iran’s economy is booming, with the country recording soaring highs in the oil and energy industries.
Earlier this week, the US imposed sanctions against a network that smuggles Iranian oil disguised as Iraqi oil and on a Hezbollah-controlled financial institution, the Treasury Department said.
Sanctions are increasingly seen as ineffective, existing “only on paper”, while Iranian oil production and exports surge. Experts from all around the world are divided about the efficacy of sanctions. Agathe Demarais, the author of Backfire: How Sanctions Reshape the World Against U.S. Interests, told NPR, “The reality is that sanctions are sometimes effective, but most often not, and it is hard to accurately predict when they will work.”
Iran used to be the most-sanctioned country in the world until it was surpassed by Russia following the launch of its war in 2022. But Tehran’s fortunes in the energy sector tell a completely different story.
A number story
Iran’s oil sector is thriving despite decades of US-led sanctions, with output reaching a 46-year high in 2024 and set to rise further in 2025.
Energy export revenues soared to a 12-year high of $78 billion in 2024, a dramatic jump from $18 billion in 2020.
The story of how Iran has managed to bypass US oil sanctions goes back many years. It’s a mix of US political decisions, Iranian creativity, and China’s growing global influence.
At times, the US looked the other way to keep oil prices low and avoid rising inflation. Other times, it shows how Iran and China have become better and more determined at working around the rules.
Sanctioned plays smart
Iran has diversified its energy exports, ramping up production of condensates and natural gas liquids (NGLs) such as ethane, butane, and propane, which now generate significant foreign currency.
The country has the second-largest natural gas reserve and is the third-largest producer of the resource after Russia and the US.
The South Pars natural gas field, the largest in the world, is located in southern Bushehr province. Iran shares this facility with Qatar, where it is called the “North Field”. The field accounts for about 66 per cent of Iran’s gas production, making it the main source in the country, which is the world’s third-largest gas producer after the United States and Russia.
Impact Shorts
More ShortsA military hand
The Islamic Revolutionary Guards Corps has played a key role in developing domestic infrastructure to process and export these products, bypassing the need for foreign partners.
The buyer
China is now the main buyer, taking 90 per cent of Iran’s oil exports, thanks to a sanctions-proof supply chain involving discreet shipping and non-dollar transactions.
The US sanctions on Iranian oil are not likely to change this business setup, as China has been buying discounted Iranian oil in bulk for years now, and analysts say that a hidden supply chain using transshipment and a payment system based in yuan that avoids the US dollar.
While Chinese customs have not officially reported any oil imports from Iran since 2022, ship tracking data from Kpler shows that China’s imports of Iranian crude have actually increased, nearly doubling to 17.8 million barrels per day in 2024 compared to 2022.
Wars? No problem
Recent geopolitical tensions, including the Israel-Iran conflict, have not dented Iran’s oil output, with any damage to facilities quickly repaired and the US intervening to prevent escalation in the energy sector.
The result is that Iran’s oil industry is more robust than ever, undermining the credibility of Western sanctions and providing the regime with a steady flow of petrodollars.
With inputs from agencies
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