My newest monthly bulletin for the Middle East Policy Council (titled “Iran’s ‘Preemptive Boycott’ is Propaganda“) offers more data, context, and quotes from states which Iran now claims to be boycotting. If you’ve read my blog posts from February and last week, you know that Iran’s official media is claiming victory over Europe. According to these sources, the Islamic Republic is preemptively boycotting countries that have threatened to embargo Iran after July 1.
The U.K., France, Germany, Greece, Italy, and Spain have all supposedly been “cut off” by Iran as punishment for their willingness to cut imports. But these official claims–as the MEPC brief argues–are simply propaganda intended for domestic consumption. Most countries Iran has claimed to have cut off have, in truth, not imported Iranian crude for months, meaning that recent announcements are well behind the curve.
Here’s a sample from some closing paragraphs:
The International Energy Agency’s most recent report estimates that Iranian production fell by 50,000 bpd in March. Overall production stands at 3.3 million bpd, which is 250,000 bpd short of last year’s pre-sanction levels. Iran’s first quarter shortfall may be explained by lengthy negotiations held between China’s Unipec and the National Iranian Oil Company. These negotiations delayed Chinese loadings of Iranian crude until March. But total exports could still drop by more than 800,000 bpd this summer after the EU ban is matched by significant cuts in countries like Turkey, Japan, Taiwan, South Africa, Malaysia, and South Korea.
Although Iran’s nuclear posture has not yet changed due to sanctions, official statements and broadcasts show the regime is struggling to frame setbacks as victories. Data and rebuttals from across Europe prove Iran is not cutting off customers prematurely. The truth is quite the opposite: refiners in the EU are shifting to new sources well before the European embargo takes hold on July 1. Observers should expect Iranian officials to continue denying that sanctions are hurting oil exports in the coming months, even though sanctions will bite deeper and more customers outside the EU are expected to cut imports to avoid U.S. sanctions.
Perhaps most revealing of all, Iran has taken the extraordinary step in recent weeks of disabling tracking systems on most ships in its tanker fleet, thus making it difficult for the industry to monitor sales. Industry sources also report that Iran may be offering financing, insurance, free freight, and generous credit terms, allowing buyers to delay payments for up to six months for each cargo of two million barrels. Combined these deal sweeteners may amount to a 10 percent discount on the value of each supertanker.