Iran’s sanctioned oil production has risen to its highest level in almost two years thanks to growing Chinese imports—a development that could lessen the West’s leverage in talks over reviving a nuclear deal with Tehran.
In two closely followed oil market reports released this week, OPEC and the International Energy Agency separately cited big jumps in Iranian crude oil production. The Islamic Republic pumped 2.3 million barrels a day in March, according to the IEA. The agency said that was its highest production level since May 2019, when the Trump administration imposed a full embargo on Iranian oil sales.
The IEA said the production hike was driven by China, which boosted purchases from Tehran to 600,000 barrels a day, five times more than in the first nine months of 2020. The agency said the secretive nature of Iran’s global sales makes it difficult to track the exact amount Iran is selling.
Oil traders and officials familiar with Iranian sales said they started seeing bigger orders from Chinese buyers after Joe Biden won the U.S. presidential election in November. As a candidate, Mr. Biden had pledged a return to a 2015 nuclear pact with Iran that eased sanctions.
“Despite U.S. sanctions, Iran’s crude supply has been on an uptrend since late 2020, after a buying spree from China appeared to accelerate,” the IEA said this week. “Hefty purchases appear to be continuing as Washington and Tehran restarted indirect talks,” the agency said.