Iran's Oil Minister Denies ‘High Discounts' to Buyers
Iran's Oil Minister Javad Owji has refuted claims by some presidential candidates that the government is offering high discounts to foreign oil customers amid US sanctions.
Iran's Oil Minister Javad Owji has refuted claims by some presidential candidates that the government is offering high discounts to foreign oil customers amid US sanctions.
Owji said on Sunday that the administration of late president Ebrahim Raisi did not offer "high discounts" to its buyers, tacitly referring to Chinese refineries that are the main importers of Iran’s crude.
He said that over the past three years, significantly fewer discounts have been given compared to the previous government.
Tehran keeps its export and revenue details as state secret but Owji’s remarks come despite reports that Tehran provides huge discounts to China, charging as little as $37 per barrel while oil has been trading at around 75-85 dollars in the past year. According to a report by Reuters Iran offers at least $13/barrel discount to Chinese refineries.
In May 2023, an analyst quoted an unnamed EU energy security source as saying that China, which already had secured a 30-percent discount from Iran before the Russian invasion of Ukraine, demanded and received higher price cuts. Beijing already buys Russian oil at a large discount.
“But it is even worse for Iran, as – from 11 November 2022 - China has been paying Iran in non-convertible Yuan, that is Yuan that can only be used inside China and/or spent buying Chinese goods,” the EU source added. “Worse still is that whilst Yuan is the key instrument in payment, China is also using the currencies of Angola, Zambia and Kenya to pay Iran, and China is doing this as a means to induce Iran to buys goods from these countries so that these countries, in turn, can service their loans to China,” he argued.
Last June, The Wall Street Journal reported that Iran was exporting the highest amount of crude oil in five years, although it offers discounts of up to $30 per barrel. The report confirmed estimates that Iran shipped 1.6 million barrels per day in May and June, up from 250,000 barrels in 2019 and 2020, just after the United States imposed full sanctions.
Data from oil tanker tracking companies like Vortexa and TankerTrackers shows that Iran exported roughly 1.3 million barrels per day (bpd) of crude oil and condensate in 2023, along with over 220,000 bpd of fuel oil (mazut).
OPEC estimated the price of Iranian oil exports in 2023, excluding discounts and sanctions-busting costs, to be above $83 per barrel. Based on this, Iran's revenue from crude oil, condensate, and fuel oil exports should have been at least $46 billion. However, Iranian customs data reveals the actual figure was only $36 billion.
This $10 billion discrepancy suggests that around 22% of Iran's oil revenue was lost due to high discounts and sanctions-related costs.
Another way to look at the issue is that Iran needs around $50 billion from oil exports to balance its budget, but at least half of that amount is not realized. This means it receives around $25 billion in hard currency.
Another reason for Iran’s oil revenues being probably around $25 billion is the costs involved in illicit shipments to evade sanctions, and losing money in trying to repatriate the funds in hard currencies. Iran’s banking system is under US sanction and any oil revenues are laundered through intermediaries.
This issue resonated during the recent Iranian presidential election. Candidates Masoud Pezeshkan and Mohammad Bagher Ghalibaf both directly and indirectly criticized the impact of sanctions, high discounts, and wasted revenue from oil exports.
Despite the evidence, the oil minister continues to insist on his claim of not offering high discounts. He stated that Iran currently has 15 oil buyers, but only named China and Syria, leaving the identities of the remaining "customers" undisclosed.
Adding to the confusion, Oji claimed Iran's daily crude oil production has reached 3.6 million bpd. This contradicts figures from OPEC and the International Energy Agency, which estimate the actual production to be below 3.3 million bpd.
According to the survey conducted by the Netherlands-based Gamaan Institute, only 22% of respondents confirmed they would definitely vote, while 12% remain undecided.
Titled "Iranians’ Attitudes Toward the 2024 Elections," the survey was conducted online over three days from June 17 to 19, 2024, with a sample of 77,216. However, in the past three days the election campaign might have somewhat impacted voters' mood in favor of participation.
Additionally, approximately 34% of the population reported being unaware of the date of the snap election on June 28 in the wake of the sudden death of former President Ebrahim Raisi. He died last month in a helicopter crash along with several officials.
The results of the survey highlight deep-seated dissatisfaction with the current political system, with roughly 68% of respondents citing "opposition to the overall system of the Islamic Republic" as their primary reason for not voting. Other notable reasons included "the limited power of the president" (18%) and the "disqualification of my preferred candidate" (8%).
Iran International cannot independently verify the accuracy of the survey since polling with traditional methods is not possible within Iran.
However, in February this year, Gamaan’s survey revealed that three-quarters of Iranians will boycott the upcoming parliamentary elections, with 75% seeking the overthrow of the government. The prediction of that survey came out to be largely true, with the government claiming a 40% turnout.
The survey also touched on public perceptions surrounding the helicopter crash which killed Raisi, with 51% of respondents attributing it to "power struggles within the regime," while 13% believing it was due to natural factors, and 6% suspecting sabotage by foreign countries.
The findings reflect the general mood in the country amid economic and social turmoil. Iran has been suffering from more than 40% annual inflation for the past four years, and unprecedented government violence against those who have dared to protest since 2019.
In recent days, political and civil figures, women activists, and civil organizations, have called for boycotting the elections. More than 500 teachers, union activists, and prominent cultural figures in Iran publicly announced their decision to abstain from voting in the upcoming presidential elections through a joint statement.
From the confines of Evin prison, Iranian Nobel laureate Narges Mohammadi denounced the presidential election in Iran, calling it the "illegal elections of the oppressive and illegitimate government”.
Similarly, political prisoner Mahboubeh Rezaei slammed the elections explaining that “the Islamic Republic has no legitimacy" after almost two years of the Woman, Life, Freedom uprising has left the government in crisis.
Dozens of citizens also said in messages to Iran International that they would not participate in the elections.
On Saturday, it was reported that the US will allow remote voting stations for Iranians abroad. Iranian Americans strongly criticized the decision saying that it only bolsters the facade of legitimacy for the regime.
With the world's largest diaspora of Iranians abroad, there will be over 30 stations in the US which last year labeled Iran the world's number one state sponsor of terror.
Ballot boxes will be set up at the Iranian Interests Section of the Pakistani embassy in Washington and in New York among others.