Mohsen Paknejad, the oil minister of Iran’s regime, said: “The snapback does not add anything new to previous sanctions,” referring to the UN sanctions that were reinstated on September 28 due to the regime’s lack of cooperation on its nuclear program under the 2015 agreement with world powers. He also noted that so far, 25 sanction packages, including 480 new sanctions, have been imposed on Iran. However, the Iranian regime continues its oil exports to China.
However, data from the oil tanker tracking company Kpler shows that before the activation of the snapback mechanism, Iran was exporting about 1.46 million barrels of crude oil and condensate per day to China, a figure that has since declined.
Iranian Regime Puts Iran’s Oil on Sale in China with Bigger Discounts
Although none of the UN Security Council resolutions directly target Iran’s oil exports, their side effects are significant. These include the reinstatement of international sanctions on Iran’s shipping industry, a ban on selling fuel to Iranian tankers, inspections of ships suspected of carrying dual-use goods, and restrictions on financial transactions.
The daily charter rate for a foreign oil tanker under normal conditions is about $100,000, whereas the so-called “shadow fleet” tankers charge Iran several times that amount. To conceal the true origin of the oil, these shipments are transferred at least twice from one ship to another.
Hidden Costs and Greater Discounts for China
These tankers now face difficulties refueling at international ports, significantly increasing both the time and cost of transporting Iranian oil. Iran’s regime is therefore forced to offer steeper discounts to Chinese buyers, as even non-dollar currency transfers face challenges due to banking sanctions, and Chinese banks are compelled to comply with restrictions.
According to this year’s budget law, the Islamic Revolutionary Guard Corps (IRGC) is responsible for selling one-third of the country’s exported oil and collecting its revenue. The IRGC is under some of the most severe international sanctions, and any cooperation with it is closely monitored worldwide.
The rising costs of evading sanctions mean that a significant portion of foreign currency income is wasted, reducing the regime’s ability to import essential goods. Consequently, the budget deficit grows, imports become disrupted, and additional inflationary pressure burdens people’s livelihoods.
Who benefits under these circumstances — China, as the main buyer of Iranian oil, or the IRGC, which controls one-third of the country’s oil sales?
Experts also point out that the Iranian regime has not gained any tangible benefit from its nuclear projects. For example, the Bushehr Nuclear Power Plant has been restarted twelve times using imported nuclear fuel from Russia and has never operated on domestically produced fuel.
Under these circumstances, the regime’s insistence on continuing uranium enrichment — despite repeated Israeli attacks on its nuclear facilities — is not justifiable and only benefits those who profit from sanctions while harming the Iranian people and the economy.
The Iranian people grow poorer every day, and the government is on the path to bankruptcy. Iran now stands on the brink of economic collapse, with little time left before reaching the point of no return. He adds that government debt has reached about 40% of the entire national economy, meaning the state’s financial structure has effectively collapsed.
Experts at the oil tracking company Kpler believe that Iran’s oil policy has reached a point where the regime must offer steep discounts to sell each barrel of oil and pay even higher transportation costs.
With the reactivation of the snapback mechanism, the Iranian regime is more isolated than ever, selling its oil below market prices.
In practice, China is Iran’s only real oil buyer — not out of friendship, but because it knows Iran’s regime is under pressure and has no choice but to sell cheap. This one-sided dependency has eliminated Iran’s bargaining power, leaving behind an economy that is dependent, fragile, and trapped in the vicious cycle of sanctions.
In a report on this matter, Deutsche Welle quoted Homayoun Falakshahi, senior oil and commodity data analyst at Kpler, as saying: “Six months ago, Iran was selling its oil with a one-dollar discount compared to Brent crude. This discount reached three dollars three months ago and has now increased to 6.5 dollars. At present, Iran is offering its oil at discounts of around 8 to 10 dollars compared to similar Middle Eastern crude.”
According to Falakshahi, with the return of UN sanctions, especially in the shipping sector, the cost of transporting Iranian oil will also increase. The volume of Iran’s oil exports may decline somewhat due to these restrictions, but a sharp or severe drop is not expected.
