Oil, gas and Iran economic analyst
Chinese customs data reveals that in July, Malaysia exported 1.53 million barrels of oil per day (mb/d) to China, a figure that has increased 12-fold since July 2018, when the United States began imposing sanctions on Iran.
To bypass these sanctions, Iran rebrands much of its oil exports to China through international brokers, particularly from Iraq, Oman, the UAE, and Malaysia, delivering it to private and small Chinese refineries known as "teapots" under the guise of these countries. The record-breaking export of 1.53 mb/d of Malaysian oil to China is particularly noteworthy, as it is three times Malaysia's total oil production.
Although this method has increased Iran's daily oil exports from around 350,000 barrels in 2019 to 1.5 million barrels this year, the costs of circumventing sanctions for Iran have also been significant. The volume of oil exports and Iran's customs data on oil revenues indicate that last year, one-fifth of the country's oil revenue was lost in the process of bypassing sanctions, and this year, the loss of oil revenue has been over 11%.
Last year, Iran offered a discount of $13 per barrel on its oil exports, and this year, the discount is $6. The reason for the reduced discount on Iranian oil is that Russia is selling its oil to China at nearly market prices, whereas last year, it offered even greater discounts than Iran.
In addition to discounts, a substantial amount is also wasted in carrying out the illicit shipments through intermediaries, but it is difficult to be certain about the amount. Some have said in the past that perhaps close to half the oil export price is lost due to discounts and expenses.
Bloomberg recently reported that "Iranian Light was last offered at a discount of $6 a barrel to ICE Brent," compared to a discount of less than $1 for comparable crude from Russia.
China's imports from Malaysia totaled 35.68 million tons in the first seven months of the year, an increase of 21% year-on-year.
In addition to offering discounts to Chinese refineries, Iran conducts ship-to-ship transfers of its oil in the oceans and is forced to keep tens of millions of barrels of its oil stored on water, eventually sending the oil to China through brokers and changing the ownership of the cargoes.
Chinese customs data shows that this year, it has not directly purchased any oil from Iran.
The trade intelligence Kpler’s tanker tracking data shows that the volume of Iran's oil transit to Chinese markets reached 1.6 mb/d in July.
In the first seven months of this year, Iran exported 1.56 mb/d of oil, of which 1.49 mb/d has transited to China and the rest to Syria, Brunei, and unknown destinations.
Data from the energy consulting firm Vortexa also shows that the volume of Iranian oil actually received by China has significantly increased this year.
Iran's customs data shows that in the first four months of the current fiscal year (from March 20 to July 21), Iran's revenue from oil and fuel oil exports (whether in cash, through bartering oil for goods, or other means) was $15.7 billion. However, based on the volume of oil exported during this period and the oil prices, the revenue should have been at least $17.5 billion.
It also remains unclear if Iran receives payments in hard currency from China or as barter deals. The shaky status of Iran’s battered currency, rial, could be an indication that Tehran does not recover its oil revenues all in cash. The rial is hovering near all time lows of 600,000 to the US dollar.
Zarif, now back as Deputy for Strategic Affairs under President Masoud Pezeshkian, is no stranger to resignations, treating them almost like brief intermissions—having tendered five during his tenure under former President Hassan Rouhani.
After being seen in the coverage of Supreme Leader Ali Khamenei’s meeting with Pezeshkian’s cabinet on Tuesday, Zarif confirmed his return with a tweet.
“Following the prudent negotiations and thoughtful guidance of the esteemed President, and under his formal directive, I shall, with faith in divine providence and in the hope of continued support and counsel from the noble people, continue my responsibilities as the Deputy for Strategic Affairs to the President,” he wrote.
The former diplomat also commended his team's efforts, which he led as head of a steering committee responsible for evaluating the qualifications of candidates for ministerial positions in the cabinet.
Reflecting on the committee’s work, Zarif tweeted that he takes pride in the fact that "the appointments of nearly 70% of ministers and vice-presidents, as well as a significant number of deputy ministers and organizational leaders, were the result of expert recommendations stemming from this transparent and highly participatory process".
However, here also Zarif did an obvious turnabout. He had voiced his dissatisfaction with the steering committee’s outcomes when he announced his resignation from the cabinet in mid-August. He revealed that of the 19 ministers proposed, only three were top choices recommended by the committee he chaired, while ten were not on the council's list at all, raising serious concerns about the transparency and integrity of the selection process.
The cabinet, which promised to include young leaders and embrace diversity and inclusion, was later criticized for excluding young and female Iranians, resulting in a male-dominated, aging government.
Even more troubling was the revelation that many of the ministers are familiar faces, some with ties to the IRGC and others with questionable records from their previous government roles. This has sparked significant criticism, with nearly half of the cabinet drawing disapproval from regime insiders and the local media.
As reported by Tehran's media, the primary reason for Zarif's resignation was his alleged "disqualification" from serving as the deputy due to a failure to obtain the required security clearances. This disqualification was linked to the Law on the Appointment of Individuals to Sensitive Positions, enacted on October 2, 2022, which bars those with dual citizenship or close family members holding such status from sensitive roles. Zarif's children, born in the US during his tenure at the UN in New York, automatically acquired US citizenship, which legally disqualified him from the position.
This law was not in effect during his tenure as Foreign Minister under President Hassan Rouhani from 2013-2021.
In his public resignation announcement, Zarif made it clear that his departure was not due to disillusionment with Masoud Pezeshkian’s proposed administration. Instead, he cited concerns about his effectiveness in the strategic deputy role, emphasizing that his decision was not a reflection of disappointment with Pezeshkian's leadership.
Despite his own admission that his eight years as foreign minister amounted to "zero" influence—largely due to being outmaneuvered by the IRGC commander Qasem Soleimani—Zarif’s decision to join Pezeshkian's campaign from the early days raised eyebrows.
His return to the political arena, where he previously felt powerless, has led many to question his motives.
In his new role as Pezeshkian's deputy, Zarif won’t be building new empires but will instead operate from within the presidential office, continuing the same maneuvers he perfected during Pezeshkian’s campaign—rallying support and advancing the president’s agenda. His task is to help Pezeshkian navigate the complex web of power structures, much like he did as foreign minister. This time, Zarif may believe he can wield greater influence from within the intricate corridors of power, even if it means working within the very system that once sidelined him.
The foundation, in a statement on its website, highlighted that both the Queen, who has been in exile since the Islamic Revolution of 1979, and the Crown Prince, stand as "powerful symbols of opposition to the terrorist theocratic regime now ruling Iran."
It further underscored their relentless dedication over the past four decades, noting that "they have each devoted more than 40 years to championing religious freedom in Iran, advocating for a democratic form of government backed by popular vote, and bringing attention to myriad ongoing human rights abuses in Iran."
The statement also recognized the long-standing relationship between Mohammad Reza Shah Pahlavi, the last Shah of Iran, and President Richard Nixon, a bond that began in 1953.
The foundation's website elaborated that "the late Shah, who ruled Iran from 1953 to 1979, was a strong ally of the United States and a bulwark in the Cold War with the Soviet Union." It further detailed how the young Vice President Nixon and the young Shah first met in 1953, forming a close personal relationship that spanned nearly three decades.
Recalling Nixon's reflections in a 1983 interview, the statement quoted him as saying, "I knew the Shah better than any world leader I had met over the past 37 years of public life," and added that Nixon found the Shah to be "a very sensitive man, a very intelligent man, one who understood the world as well as any leader that I had met."
The Shah always faced both domestic and international opposition by left-leaning individuals and groups, who accused him of being too close to the United States at a time when there was a global ideological and military confrontation with the Soviet Union.
Established in 1995, shortly after the passing of President Nixon, the Architect of Peace Award was created to honor those who exemplify his enduring vision of fostering a more peaceful world.
Over the years, this distinguished award has been bestowed upon a notable array of individuals, including former Presidents Gerald Ford, George H.W. Bush, and George W. Bush; former Secretaries of State Henry Kissinger and Mike Pompeo; Senators Elizabeth Dole, Joe Lieberman, and John McCain; and Ambassadors Walter and Leonore Annenberg, as well as Robert C. O’Brien.
Khamenei's warned that Washington should not be trusted should any talks under President Masoud Pezeshkian resume.
The timing and rhetoric could all be part of a deception campaign for sanctions relief, some experts and Iran watchers believe.
"World powers should see the Supreme Leader’s willingness to restart nuclear talks as a simple ruse to obtain continued sanctions relief regardless of who is elected US president," said Andrea Stricker, the Deputy Director of the Foundation for Defense of Democracies (FDD)’s Nonproliferation and Biodefense program.
A State Department spokesperson told Iran International that it will judge Iran’s leadership by their actions, not their words.
The US approach, they said hasn't changed, and that If Iran wants to demonstrate seriousness, they should stop nuclear escalations and start meaningfully cooperating with the IAEA.
Stricker views Khamenei's remarks as a charade, with the nation having had more than three years to revive a nuclear deal under the Biden administration. Instead, the world saw the Islamic Republic advance its nuclear program by enriching enough uranium for several bombs.
US Secretary of State Antony Blinken said that Iran’s breakout time, which is the amount of time needed to produce enough weapons grade material for a nuclear weapon, “is now probably one or two weeks." Blinken made the comments last month at the Aspen Security Forum.
The preferred method of containment under the Biden administration has been diplomacy and allowing Iran to circumvent economic sanctions. The Biden administration also released around $16 billion of Tehran's frozen funds in 2023, before Iran's proxy, Hamas, launched its October 7 attack on Israel.
The administration engaged in more than a year of indirect negotiations with Tehran in 2021 and 2022. Their goal was to revive the Iran nuclear deal which the US withdrew from under the Trump administration in 2018.
Iran maintains that its nuclear program is peaceful and that it has no plans to develop nuclear weapons, but the UN's nuclear watchdog warned that Iran is enriching uranium to near weapons-grade levels. Iran's estimated stockpile of enriched uranium had reached more than 30 times the limit set out in the 2015 JCPOA nuclear agreement between Tehran and world powers.
The Islamic Republic has also barred some of the Vienna-based agency’s inspectors.
Iran's new president Masoud Pezeshkian campaigned on a promise to reengage with the West. Of significance is that the country's new foreign minister, Abbas Araghchi, was heavily involved in 2015 negotiations on the deal.
For Kasra Aarabi, the Director of IRGC Research at United Against Nuclear Iran (UANI), the talks may be used by Khamenei as a front to get more assets unfrozen - preparing for and anticipating a Donald Trump presidency. The former president, who is attacking Biden's foreign policy record, is expected to be tougher on Iran's Islamic government.
"Khamenei may also be using this as a final attempt to get more assets unfrozen prior to a new US administration. If this is the case, expect threats/escalation in the next few months to force diplomatic concessions," said Aarabi.
The previous Trump presidency saw US policy that advocated for “maximum pressure” against the Iranian ruling system. It may do so again, if he is elected president for a second term.
The regional conflict between Iran and Israel, reached a dangerous escalation after the assassination of Hamas leader Ismail Haniyeh in Tehran last month. The potential for a regional conflict between the two adversaries may also be used as leverage by Iran, promising calm in exchange for benefits.
On X, Jason Brodsky, the policy director of UANI posted that the door was never shut for negotiations on Iran's nuclear ambitions.
The tactic, according to Brodsky is one Iran has used time and time again. One that allows the regime to benefit from the prospect of talks as a lure to neutralize pressure.