In 2020, Iran produced less than 2 million barrels per day (b/d) of crude oil, an almost 40-year low in Iran’s production levels according to our analysis, which we updated in July. Several factors contributed to Iran’s low crude oil production in 2020, including the global economic decline that resulted from the COVID-19 pandemic and international sanctions on Iran’s crude oil that limited its crude oil exports.
Iran holds abundant crude oil and natural gas reserves. At the end of 2020, Iran’s reserves accounted for 25% of oil reserves in the Middle East and 12% of global oil reserves. Although Iran is a member of OPEC, it is exempt from the production cuts under the OPEC+ agreement because its crude oil production remains limited by US imposed sanctions.
Iran's crude oil exports and production have declined since the United States announced in May 2018 that it would withdraw from the Joint Comprehensive Plan of Action (JCPOA) and reinstate sanctions on Iran’s oil exports. Crude oil production held steady at around 2.6 million b/d during the first few months of 2019, when the United States government granted sanction waivers for some of Iran’s key oil-importing countries. However, after these waivers expired in May 2019, output fell to about 2.1 million b/d.
We estimate that exports of Iran’s crude oil and condensate fell from more than 2.5 million b/d in 2017, the year before the United States re-imposed sanctions, to an average of less than 0.4 million b/d in 2020.
Of the crude oil and condensate that Iran exported in 2020, more than half went to China. According to analysis from ClipperData, much of the oil that was shipped from Iran to China was relabeled as coming from countries such as Malaysia, Singapore, the United Arab Emirates, Iraq, and Oman.