Tanker tracking sources say Iran’s oil exports to Syria have increased substantially in recent weeks and currently several cargoes have reached the Baniyas port in Syria.
Tanker Trackers reported on Tuesday April 28 that several Iranian vessels are near port in Syria and the Middle East Economic Survey (MEES) reports that these tankers are carrying 6.8 million barrels of oil.
Since full U.S. sanctions were imposed on Iran in May 2019, Syria has been receiving an average of around 2 million barrels of crude monthly from Iran, and now more than three times is being delivered at once.
In January and February, Iran’s biggest oil customer, China reduced its imports and with this large cargo arriving in Syria, that country has become the largest oil importer from Iran.
There can be several reasons why this is happening. Excess oil stocks in the midst of sanctions and a global oil glut is forcing Iran to ship and perhaps store the oil in a friendly country. Another reason is that Bashar Assad’s government and Hezbollah can be conduits to sell the oil on the black market. One place Hezbollah can manage to do this is Lebanon, where it has sway over the government.
Although loading of Iranian crude remains low according to monitoring companies, but China’s customs reported a huge increase in imports of Iranian oil in March, reaching 608,000 barrels per day.
The extra oil registered by Chinese customs can be from around 20 million barrels stored in China or from Iranian tankers floating on the high seas loaded with unsold oil.
As the coronavirus epidemic subsides in China, economic activities in the country rise and so does demand for oil.
The International Monetary Fund estimates that Iran may be able to export 340,000 barrels a day in 2020; a far cry from a peak of 2.5 million before U.S. sanctions. This will result in billions of dollars of budget deficit and more shortages of foreign currency.
OPEC reports Iran’s daily production at 2 million barrels. With domestic consumption of 1.8 million, Iran has around 200,000 barrels to export. But Iran has more than 100 million barrels of unsold oil in storage.