Iran anticipates higher oil exports in 2021 as Biden administration takes charge in United States

• DOI: http://doi.org/10.1111/oet.12831
• Published date: 01 January 2021
• Date: 01 January 2021

FOCUS

Iran anticipates higher oil exports in 2021 as Biden

administration takes charge in United States

Iran is expecting a major increase in crude and condensate

sales from about 650 000 bpd in 2020 to 2.3 mn bpd in 2021,

following the election of Joe Biden as US President, and the

subsequent likely easing of US sanctions. The country's oil

and gas development plans and exports have suffered

severely since President Trump reintroduced sanctions and

other measures during his tenure, although Iran has

maintained sales to a few key buyers, while expanding its

demand at home through higher petrochemical production.

US President-elect, Joe Biden, is expected to attempt to

rebuild the JCPOA (Joint Comprehensive Plan of Action)

nuclear deal

1

that President Obama and allies singed in

2015, and which Trump abandoned in 2018 against the will

of all the other counter-signatories, including close allies,

the United Kingdom, Germany, and France. Before that,

the Trump policy of “maximum pressure”will be aban-

doned and sanctions are expected to be relaxed, although

they could be used as a bargaining chip in future negotia-

tions. This should help lift Iran's oil and gas exports in 2021

and beyond, provided buyers can be reestablished. The new

target of 2.3 mn bpd for 2021 includes potential domestic

sales to private buyers on its energy exchange (normally for

resale abroad)—although Iran's President Hassan Rouhani

says he is confident that the full volume can be sold directly

to the international market. The forecast figures are

included in Iran's budget for the next Iranian calendar year

(March 2021–March 2022), according to state news agency

IRNA, with a planned oil price of just $40/bl.

Sanctions were first imposed in May 2018 after the

Trump administration followed through on its 2016 elec-

tion commitment to pull out of the JCPOA. But then in

November 2018, they were relaxed slightly as wavers were

issued to several regular buyers, possibly to ease global

crude supply tightness at the time. The US waivers enabled

Iran to sell more oil, but only until May 2019. Wavers on

gas sales to Iraq have also allowed for e xports, especially

during the summer when power demand peaks—although

Iran temporarily cut this supply at the end of December

due to unpaid bills.

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By 2020, oil exports had collapsed to

about 650 000 bpd according to the Iranian authorities

(third party estimates vary from 200 000–800 000 bpd),

down from about 2.6 mn bpd in 2017—the last full year

before sanction were reimposed (see graph). External

assessment of Iranian sales is made difficult by a lack of

data and the disabling of crude vessel tracking systems.

The only major remaining takers are war-torn Syria—

which receives the shipments on a credit basis—and China

(both directly and via trans-shipment off Malaysia), which

pays a discounted rate. Iran is also exporting oil products to

Venezuela (Figure 1).

1|CONSTRAINED GIANT

The collapse in exports has seen Iranian production fall

from 3.83 mn bpd in May 2018 to just 2 mn bpd in

FIGURE 1 Iranian crude and condensate

exports (2020 estimates; 2021 forecast).

Source: MEES, EIG, Platts, EIA

Oil and Energy Trends. 2021;46:3–11. wileyonlinelibrary.com/journal/oet © 2021 John Wiley & Sons Ltd 3

DOI: 10.1111/oet.12831