Iran's oil exports hit 5-year high despite US 'maximum pressure'
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Data from OPEC revealed that in May, Iran reached 3 percent of the global oil market share.
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A worker of the Venezuelan state oil company PDVSA waves an Iranian flag as the Iranian-flagged oil tanker Fortune docks at the El Palito refinery in Carabobo, Venezuela, in May 2020. (AP)
Iranian oil exports have hit a five year high despite the United State's "maximum pressure" campaign launched by former US President Donald Trump after Washington's unilateral withdrawal from the nuclear deal in 2018, Reuters reported on Saturday citing experts and sources informed on the matter.
The crude exports came as some major energy producers have cut their supplies in recent months, suggesting that Iran is taking up new shares in the market. Members of OPEC and OPEC+ (which includes Russia) have made several cuts to their oil supply in the market, citing lower global demand.
Saudi Arabia announced a one million bpd production cut earlier this month, while Saudi Energy Minister Prince Abdulaziz bin Salman noted that the slash in output would be for July but "can be extended".
During the month of May, Iran's oil exports exceeded 1.5 million bdp, a data observer said. They were around 2.5 million bpd before the US withdrawal from the JCPOA in 2018,
Data from OPEC revealed that in May, Iran reached 3 percent of the global market share, the highest since 2018, and Tehran said it has boosted its output to 3 million bpd.
The International Energy Agency IEA said earlier this week that the country's May crude production is at 2.87 million bpd, close to Iran's official data.
Sanctions not working
On the other hand, some market analysts said that Iran's production reached 3.04 million bpd in May, up from 2.66 million bpd in January, while crude and condensate exports reached 1.93 million bpd.
"Sanctions are in place but perhaps they are not fully implemented or monitored," said Sara Vakhshouri of American failed bank SVB. Vakhshouri is known for highly criticizing Biden's administration for loosely addressing Iran's oil sector.
"Also all of these supply volumes are in the dark market, where there is no transparency and so they are not reflected in formal global supply and export data," she said.
A spokesperson for the US State Department said all sanctions on Iran are still in effect.
"We do not hesitate to take action against sanctions evaders, using all our available sanctions authorities," the spokesperson stated.
Shipping data suggests that most Iranian exports are meant for China, Syria and Venezuela.
More cuts
In early June, OPEC+ energy giants agreed to cut oil supplies to the market through 2024. Iran, Venezuela, and Libya, however, are exempted from such decisions.
JP Morgan analysts said this week that more cuts are required by OPEC+, while the financial institution lowered their forecast on oil prices in 2023 from 90 USD to 81, explaining that rising output was countering demand growth.
"Within the broader OPEC+ alliance, supply has also been rising outside the core members," the analysts at JP Morgan said in their report. They also changed their expectations for Venezuela, Nigeria, and Iran's oil production by almost 600,000 bpd from November 2022.
"Invariably, to make room for this supply growth, OPEC+ needs to cut more, were the alliance to adhere to the market management strategy."
Read more: US budget deficit hits staggering $1.1tln, Biden hopes to refill SPR
Crude prices were down approximately 10 percent in just two days of trading in early June, a first since the beginning of 2023 after ending 2022 up nearly 7%. The price fall comes amid concerns about a global recession and the worsening Covid situation in China, the top oil importer said earlier this month.
"Oil prices have tumbled … [on] the uncertainty [in] near-term economic prospects for China amid surging COVID cases," said Ed Moya, an analyst at online trading platform OANDA.
