Iranian oil exports typically make up most of the country’s total export earnings, but last year the government of President Mahmoud Ahmadinejad saw a 27 percent dive in revenue thanks to the tightening of sanctions by the United States and the European Union, according to the U.S. Energy Information Administration.
The EIA said crude exports were down 39 percent in 2012, to 1.5 million barrels a day, a level unseen since Shi’ite Iran was engaged with a brutal war against Sunni Ba’athist Iraq in the early '80s. In late 2011, sanctions against the Ahmadinejad regime were tightened, resulting in the cancellation of projects and the hampering of existing projects by foreign multinationals.
The export of crude and downstream petroleum products account for at least half of the country’s revenue, according to the Economist Intelligence Unit.
Fuel oil exports, however, have risen, according to Thompson Reuters Oil Analytics. Fuel oil sold through the country's largest oil export terminal at Kharg Island saw a 12.5 percent increase in the first quarter, compared to the same period last year, to 86,666 barrels per day.
Sale of Iranian fuel oil gets around sanctions by using Arabian Gulf region middlemen through ship-to-ship transfers, remote ports that are off the grid of sanction watchdogs or by blending Iranian oil with oil from elsewhere.
Sanctions were tightened further last year against the country’s central bank. The EU also prohibited insurers from offering their services to carriers of Iranian oil. The measures curbed Iran’s petroleum exports by an estimated million barrels a day. Production has fallen by 700,000 barrels a day, too.
“These much-tougher measures passed by the United States and the European Union have severely hampered Iran's ability to export its oil, which directly affected its production of petroleum and petroleum products,” said the EIA in a report issued late Friday.
A new set of sanctions went into effect on April 1 that prohibits refiners of Iranian oil from obtaining insurance from companies based in the EU. The measure most affects Indian and South Korean refinery operations.