Stamatis Tsantanis, chairman and CEO of Seanergy Maritime Holdings Corp. on Trump applying “maximum pressure” on Iran oil exports:
During his previous term, Trump tried to apply “maximum pressure” to drive Iran exports lower. This strategy was part of a broader effort to force Iran to renegotiate the 2015 nuclear deal (JCPOA), which Trump withdrew from in 2018. The sanctions imposed in 2018 were among the most stringent ever applied, with no waivers granted to major importers of Iranian oil.Over the four-year period daily Iran exports fell to 400,000 barrels per day in 2020 from 1.9 million barrels per day in 2016. At the time, the sanctions took effect from 2018 and no waivers were given. Saudi Arabia and other OPEC members were called upon to fill the gap in crude oil supply so as to prevent a significant rise in oil prices. While Trump fell short of his goal of reducing Iran’s oil exports to zero, the campaign significantly weakened Iran’s economy and curtailed its oil revenue.
History of oil exports to Iran:
Under the Biden administration Iran crude oil exports rose again from 0.4 million barrels per day to 1.6 mbpd, with about 90% of that being imported by China. This is mainly due to the US government’s leniency towards enforcing the existing export sanctions, as part of its diplomatic efforts to revive the JCPOA and engage Iran in negotiations.
Trump has expressed his willingness to negotiate with Iran’s government but remains adamant that the country cannot be allowed to develop a nuclear weapon using oil sales proceeds.
It is hard to judge whether it is going to be easy to achieve but if we go by what the president has said and done so far, he has recently placed sanctions on about 130 oil tankers belonging to the “ghost fleet” used to carry Iranian oil exports.
In terms of gauging the initial response, in November and December 2024 Iran oil exports fell to about 1.3 million barrels per day indicating that Trump’s presidency is indeed having an effect on the market. Nevertheless, the challenge of completely cutting off Iran’s oil exports remains significant, given China’s continued reliance on discounted Iranian crude and Iran’s ability to circumvent sanctions through covert methods.
Comments on Iran defying U.S. sanctions and how China’s smaller “teapot” refineries are buying Iranian oil:
Iran has used hundreds of oil tankers, known as the “ghost fleet,” to covertly sell oil. This refers to approximately 470 tanker vessels that due to their involvement in the Iran trade are essentially banned from doing business along mainstream routes. As mentioned above, more than 90% of Iran oil exports are headed to China mainly purchased by so called “Teapot” refineries that represent smaller volume businesses that are not part of one of the large integrated China companies. As long as China was willing to allow imports of discounted Iranian oil and the US administration was not enforcing sanctions strictly, this left the door open for the rise in Iran oil exports that has been seen over the past 4 years.
On the U.S. handling enforcement of the sanctions of Iran:
As mentioned above, the previous US government was not really willing to enforce sanctions against Iran. This was obviously part of USA’s general diplomatic stance towards Iran, Russia and their other allies so it is best viewed more holistically in that way rather than trying to understand it as a standalone issue.
The Trump administration has already demonstrated a tougher stance, increasing enforcement actions through the U.S. Treasury and State Department’s OFAC. The latest measures include targeting companies that provide insurance, maintenance, and logistical support to the sanctioned “ghost fleet.” Unlike Biden, Trump is directly pressuring China to cut its imports of Iranian crude and has signaled possible penalties against Chinese firms involved in facilitating these transactions.
Impact on oil prices and availability if Trump enforces stricter sanctions on Iran:
Under the Republicans’ previous term (2016-2020) Saudi Arabia and other OPEC members were called upon to increase production to ease potential supply pressures
USA oil exports rose tenfold from 0.3 mbpd in 2016 to about 3.0 mbpd in 2020.
Brazilian and Atlantic basin oil exports to China in general are already on the rise.
So as a matter of general availability of oil the market is suggesting that Iran barrels should be able to be replaced efficiently from other sources.
However, prolonged enforcement could tighten supply over time, especially if China reduces its purchases of Iranian oil or if geopolitical tensions escalate further.
How much do Iran’s oil exports matter in this current market:
China’s teapot refineries are the main buyers of Iranian crude oil and they are expected to slash production sharply this year, due to unfavorable changes in China’s tax policies. At least four units have closed production during the first two months of the year.
Taking a broader view of China Oil demand, Sinopec (one of the large, integrated refiners) forecasts a decline of 5.5% to diesel demand in 2025 as well as a decline of 2.4% to gasoline demand.
Against this backdrop of relatively subdued oil demand the overall effect of these sanctions is expected to be rather muted in the first quarters. As macroeconomic conditions change over the next year we expect this to also have some knock-on effects on international oil prices.”
Source: Stamatis Tsantanis, chairman and CEO of Seanergy Maritime Holdings Corp.