Iran’s oil exports have reached a multi-year high

The recent exchange of blows between Israel and Iran has sparked heated discussions, but surprisingly little impact on the oil market. Despite Iran’s increased exports, tensions between the two countries have escalated. However, the market believes that the parties involved are not interested in a prolonged conflict and are primarily concerned with avoiding appearing weak.

Market observers note that the political risk in the region is already reflected in oil prices, which have risen sharply in recent weeks. Iran has managed to increase its oil exports, even after facing sanctions, with China being its main buyer. The recent attacks and retaliatory actions have not significantly affected oil prices, and the supply of oil remains stable.

While the US and EU have imposed new sanctions against Iran, the focus seems to be more on reducing oil revenues without severely limiting oil supply. The discount on Iranian crude oil compared to Brent is due to its lower quality and the availability of alternative transport methods to circumvent sanctions. Iran’s expanding fleet of oil tankers has allowed them to transport oil despite restrictions.

Iran has found ways to evade sanctions and increase its exports by using techniques like transferring oil offshore, disabling tracking devices, and manipulating signals to mislead authorities. The increase in floating oil storage indicates that Iran has more oil to sell, but demand from China is currently weak. The possibility of targeting Chinese financial institutions rather than Iranian exporters has been discussed as a way to address the issue.

Overall, while tensions between Israel and Iran have escalated, the impact on the oil market has been relatively limited. Iran’s ability to increase exports and evade sanctions, coupled with China’s weak demand, has kept oil prices stable. The situation highlights the complexity of geopolitics and its impact on global commodity markets.