Iran's oil exports surged, but profits plummeted! Has the next black swan event in the oil market already appeared?
2026-01-26 15:29:12
Iran's oil industry demonstrated remarkable resilience in 2025, with exports reaching multi-year highs, yet it faced the embarrassing situation of a sharp decline in profits. The root cause of this phenomenon lies in the continued pressure of international sanctions and the complex dynamics of the global energy market. Although Iran maintains its oil exports through clandestine channels, the profits gained have shrunk significantly due to multiple factors. This has not only exacerbated the country's economic predicament but also triggered social unrest and international attention. This article will delve into the causes, impacts, and future trends behind this contradiction, revealing the true picture of Iran's oil economy under sanctions.
The growth of Iranian oil exports relies heavily on a vast "shadow fleet" system—a global network of aging tankers used to circumvent international sanctions and secretly transport crude oil to overseas markets. Major Asian powers, as primary buyers, receive large quantities of Iranian oil, much of which is then transported to small, independent refineries, the so-called "teapot refineries." These smaller refineries, lacking international operations, have a strong demand for cheap crude, making Iranian oil their preferred choice.
According to ship monitoring data, the fleet currently comprises 613 tankers, including 180 Very Large Crude Carriers (VLCCs), ensuring stable and even increased exports in certain months. In 2025, Iranian oil sales surpassed any year since 2018, with daily exports approaching 2 million barrels in October, a multi-year high. However, this achievement has not come without cost. The Trump administration's continuous efforts to combat this network through sanctions and special forces operations have led to a sustained increase in transportation difficulties and costs.
The core reason for the declining profits lies in a network of intermediaries and buyers who are taking full advantage of Iran's predicament and dependence on oil revenues, demanding higher processing fees and larger discounts. The sanctions environment has forced Iran to establish new intermediaries to circumvent restrictions, meaning that every link in the supply chain has to pay additional costs.
Gregory Blu, an analyst at consulting firm Eurasia Group, points out that everyone is trying to get a piece of the pie, resulting in Iran actually retaining only about two-thirds of the total sales profit.
Compared to the higher revenue levels of previous years, total crude oil sales in 2025 are estimated at around $30 billion, but profits will shrink significantly.
Furthermore, the decline in global crude oil prices has further depressed selling prices, with Brent crude currently around $66 per barrel and U.S. benchmark crude around $61 per barrel, down nearly one-fifth from a year ago. Compared to international benchmarks, the discount on Iranian crude has widened from $1 at the beginning of the year to $8 at the end, reflecting buyers' use of their negotiating advantage under sanctions.
The decline in oil revenues has directly eroded Iran's foreign exchange reserves, which the country relies heavily on to pay for imports and support the sharply depreciated rial. The nationwide demonstrations that erupted in late December, fueled by economic discontent stemming from the rial's devaluation, lasted for several days and represent the biggest challenge faced by Shiite leaders in over 40 years of rule.
According to Iranian human rights activists, the death toll from the unrest has exceeded 5,000. The government's response to the demonstrations by cutting off internet access not only disrupted communication with OPEC members but also increased the difficulty of monitoring oil production and maintaining market stability. OPEC representatives in the Gulf region stated that the severe disruption of communication with their Iranian counterparts further underscores the depth of the country's economic crisis.
The U.S. Treasury Department imposed a new round of sanctions on Iran this month, targeting individuals and entities involved in money laundering for the sale of Iranian oil and petrochemical products, in response to the government's crackdown on protesters. Trump administration officials emphasized that all options are still under consideration, and while the threat of military intervention has diminished, the threat to Iran's oil lifeline has not abated.
Trump's announcement of a 25% tariff on countries doing business with Iran has further exacerbated export pressures. While the full impact of this announcement on Iranian oil exports has not yet materialized, analysts believe it could increase the cost of circumventing sanctions, particularly for major buyers. Washington may avoid directly imposing additional tariffs, but the potential taxation of Iran's partners still poses a significant threat.
In addition, the United States has seized six oil tankers carrying oil from Iran, Russia, or Venezuela and has pledged to take further action, which is expected to drive up transportation costs.
As a founding member of OPEC, Iran's oil production accounts for about 3% of the world's daily total, and its export fluctuations have a significant impact on the international energy market.
Analysts predict that Iran's oil production and exports may slow or even decline, a prospect that would be even more dire if the domestic situation deteriorates further or the regime faces collapse. Brou emphasized that domestic turmoil could lead to the collapse of the oil sales system, a warning already issued by Gulf states.
Since the outbreak of war with Israel in June, Iran's exports have remained stable, but they face competition from Russian oil, which has turned to major Asian markets due to Western sanctions, forcing Iran to offer more discounts.
Meanwhile, Venezuela's oil exports have decreased following the arrest of leader Maduro, which may create space for Iran in the Asian market in the short term. However, Trump's desire to depress global prices by supplying large quantities of Venezuelan crude oil poses a long-term challenge to Iran, even though the rebuilding of Venezuela's oil industry will take years.
The process of transporting crude oil to refineries in major Asian countries is becoming increasingly complex, and the costs of so-called "ship-to-ship transshipment" to conceal the origin of goods have risen significantly. Homayoun Falakshahi, head of crude oil analysis at Kpler, points out that logistical problems mean higher costs and more intermediaries involved, ultimately leading to reduced revenue for Iran.
While Iran will continue to seek ways to circumvent sanctions, it must contend with persistent revenue declines. Increased global production and economic concerns have further depressed oil prices, with recent volatility reflecting traders' weighing of the possibility of supply disruptions.
In short, the apparent prosperity of Iranian oil exports masks a profound profit crisis stemming from the layers of sanctions, exploitation by intermediaries, and competitive pressures in the global market. Economic hardship has already triggered social unrest, and escalating international sanctions add further uncertainty. If these challenges are not effectively addressed, Iran's oil economy may face a greater risk of collapse, posing a potential threat to global energy stability.
Increased Iranian oil exports (reaching a multi-year high in 2025) have directly exacerbated the global crude oil oversupply, becoming a significant factor driving down international oil prices. Currently, Brent crude is around $66 per barrel, and the US benchmark is around $61, a drop of nearly one-fifth from a year ago, mainly due to increased global production and economic concerns.
If US sanctions escalate, the "shadow fleet" is hit, Trump's tariffs take effect, or domestic unrest leads to a slowdown in exports, a reduction in Iranian supply (accounting for 3% of global supply) could tighten the market, supporting or pushing up oil prices. However, competition from Russian oil and potential increased supply from Venezuela will partially offset this impact, resulting in high overall uncertainty and a predominantly bearish short-term outlook.
At 15:28 Beijing time, US crude oil is currently trading at $61.24 per barrel.
Oil smuggling networks under the shadow of sanctions
The growth of Iranian oil exports relies heavily on a vast "shadow fleet" system—a global network of aging tankers used to circumvent international sanctions and secretly transport crude oil to overseas markets. Major Asian powers, as primary buyers, receive large quantities of Iranian oil, much of which is then transported to small, independent refineries, the so-called "teapot refineries." These smaller refineries, lacking international operations, have a strong demand for cheap crude, making Iranian oil their preferred choice.
According to ship monitoring data, the fleet currently comprises 613 tankers, including 180 Very Large Crude Carriers (VLCCs), ensuring stable and even increased exports in certain months. In 2025, Iranian oil sales surpassed any year since 2018, with daily exports approaching 2 million barrels in October, a multi-year high. However, this achievement has not come without cost. The Trump administration's continuous efforts to combat this network through sanctions and special forces operations have led to a sustained increase in transportation difficulties and costs.
Double squeeze from middlemen and buyers
The core reason for the declining profits lies in a network of intermediaries and buyers who are taking full advantage of Iran's predicament and dependence on oil revenues, demanding higher processing fees and larger discounts. The sanctions environment has forced Iran to establish new intermediaries to circumvent restrictions, meaning that every link in the supply chain has to pay additional costs.
Gregory Blu, an analyst at consulting firm Eurasia Group, points out that everyone is trying to get a piece of the pie, resulting in Iran actually retaining only about two-thirds of the total sales profit.
Compared to the higher revenue levels of previous years, total crude oil sales in 2025 are estimated at around $30 billion, but profits will shrink significantly.
Furthermore, the decline in global crude oil prices has further depressed selling prices, with Brent crude currently around $66 per barrel and U.S. benchmark crude around $61 per barrel, down nearly one-fifth from a year ago. Compared to international benchmarks, the discount on Iranian crude has widened from $1 at the beginning of the year to $8 at the end, reflecting buyers' use of their negotiating advantage under sanctions.
The chain reaction of economic crisis and social unrest
The decline in oil revenues has directly eroded Iran's foreign exchange reserves, which the country relies heavily on to pay for imports and support the sharply depreciated rial. The nationwide demonstrations that erupted in late December, fueled by economic discontent stemming from the rial's devaluation, lasted for several days and represent the biggest challenge faced by Shiite leaders in over 40 years of rule.
According to Iranian human rights activists, the death toll from the unrest has exceeded 5,000. The government's response to the demonstrations by cutting off internet access not only disrupted communication with OPEC members but also increased the difficulty of monitoring oil production and maintaining market stability. OPEC representatives in the Gulf region stated that the severe disruption of communication with their Iranian counterparts further underscores the depth of the country's economic crisis.
US sanctions escalation and international pressure
The U.S. Treasury Department imposed a new round of sanctions on Iran this month, targeting individuals and entities involved in money laundering for the sale of Iranian oil and petrochemical products, in response to the government's crackdown on protesters. Trump administration officials emphasized that all options are still under consideration, and while the threat of military intervention has diminished, the threat to Iran's oil lifeline has not abated.
Trump's announcement of a 25% tariff on countries doing business with Iran has further exacerbated export pressures. While the full impact of this announcement on Iranian oil exports has not yet materialized, analysts believe it could increase the cost of circumventing sanctions, particularly for major buyers. Washington may avoid directly imposing additional tariffs, but the potential taxation of Iran's partners still poses a significant threat.
In addition, the United States has seized six oil tankers carrying oil from Iran, Russia, or Venezuela and has pledged to take further action, which is expected to drive up transportation costs.
Potential risks in the global energy market
As a founding member of OPEC, Iran's oil production accounts for about 3% of the world's daily total, and its export fluctuations have a significant impact on the international energy market.
Analysts predict that Iran's oil production and exports may slow or even decline, a prospect that would be even more dire if the domestic situation deteriorates further or the regime faces collapse. Brou emphasized that domestic turmoil could lead to the collapse of the oil sales system, a warning already issued by Gulf states.
Since the outbreak of war with Israel in June, Iran's exports have remained stable, but they face competition from Russian oil, which has turned to major Asian markets due to Western sanctions, forcing Iran to offer more discounts.
Meanwhile, Venezuela's oil exports have decreased following the arrest of leader Maduro, which may create space for Iran in the Asian market in the short term. However, Trump's desire to depress global prices by supplying large quantities of Venezuelan crude oil poses a long-term challenge to Iran, even though the rebuilding of Venezuela's oil industry will take years.
The Cost of Logistics Challenges and Avoidance Strategies
The process of transporting crude oil to refineries in major Asian countries is becoming increasingly complex, and the costs of so-called "ship-to-ship transshipment" to conceal the origin of goods have risen significantly. Homayoun Falakshahi, head of crude oil analysis at Kpler, points out that logistical problems mean higher costs and more intermediaries involved, ultimately leading to reduced revenue for Iran.
While Iran will continue to seek ways to circumvent sanctions, it must contend with persistent revenue declines. Increased global production and economic concerns have further depressed oil prices, with recent volatility reflecting traders' weighing of the possibility of supply disruptions.
In short, the apparent prosperity of Iranian oil exports masks a profound profit crisis stemming from the layers of sanctions, exploitation by intermediaries, and competitive pressures in the global market. Economic hardship has already triggered social unrest, and escalating international sanctions add further uncertainty. If these challenges are not effectively addressed, Iran's oil economy may face a greater risk of collapse, posing a potential threat to global energy stability.
Analysis of the impact on oil prices
Increased Iranian oil exports (reaching a multi-year high in 2025) have directly exacerbated the global crude oil oversupply, becoming a significant factor driving down international oil prices. Currently, Brent crude is around $66 per barrel, and the US benchmark is around $61, a drop of nearly one-fifth from a year ago, mainly due to increased global production and economic concerns.
If US sanctions escalate, the "shadow fleet" is hit, Trump's tariffs take effect, or domestic unrest leads to a slowdown in exports, a reduction in Iranian supply (accounting for 3% of global supply) could tighten the market, supporting or pushing up oil prices. However, competition from Russian oil and potential increased supply from Venezuela will partially offset this impact, resulting in high overall uncertainty and a predominantly bearish short-term outlook.
At 15:28 Beijing time, US crude oil is currently trading at $61.24 per barrel.
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