Last month, the Chinese government banned oil tankers subject to US sanctions from entering ports in Shandong, the key province for China-Iran trade, through which about 90% of Iranian oil flows. As a result, China's imports of Iranian oil plummeted by more than half. According to data from the French analytics firm Kpler, Iran's oil shipments to China fell below 850,000 barrels per day in January, compared to over 1.8 million barrels per day in October 2023. In 2024, Shandong alone received approximately 1.74 million barrels per day from Iran, Russia, and Venezuela - accounting for about 17% of China's total imports. However, last month, these figures dropped to less than half.
Iran's oil export revenues had already been suffering due to US sanctions. Following Iran's missile attack in October, the Biden administration imposed sanctions on dozens of tankers carrying Iranian oil, leading to a slight decline in China-Iran trade. However, the most significant blow came last month, with some speculating that Beijing's tougher stance on Iran stems from fears that US President Donald Trump would impose sanctions on China.
Most Iranian oil tankers are now anchored in waters off Singapore and Malaysia, while Tehran scrambles to find non-sanctioned vessels to transport shipments to Shandong.
$2 billion in losses
Despite the gradual decline in Iran's oil shipments to China in late 2024 and their sharp plunge in January, Iranian customs data suggests that the country's oil revenues had already started to fall drastically in October 2023. Between March and September 2024, Iranian customs and government agencies consistently reported monthly oil revenue figures. However, since October, they have refrained from publishing data.
The last official figures released by Iran's customs authority indicated that the country exported $23 billion worth of oil during the first six months of the current fiscal year (March 21–September 21). Recently, Iranian Economy Minister Abdolnaser Hemmati claimed on X that oil revenues had reached $30 billion over the past ten months. This suggests that Iran's monthly oil export revenues have plummeted from $3.83 billion in the first half of the fiscal year to just $1.75 billion over the past four months, a staggering 55% decline.
Beyond the sharp drop in exports to China, Iran has also faced minor setbacks in oil sales to Syria, which ceased entirely in recent months following the collapse of Bashar al-Assad's regime. However, this only accounted for around 60,000 barrels per day.
At the end of Biden's term, Washington imposed sanctions on more than 180 tankers carrying Russian oil. According to Reuters, this led to a 3.5-fold increase in the cost of renting non-sanctioned vessels for transporting Russian oil to China. As a result, some tankers that had previously been used for smuggling Iranian oil shifted to serving Russia, further complicating Iran's ability to find legal tankers for transporting oil to Chinese ports.
In this context, international analytics firm TankerTrackers, which monitors global maritime traffic and energy data, reported over the weekend that a large tanker previously used for smuggling Iranian oil is now en route to China with 1.9 million barrels of Russian oil. Similarly, Kpler confirmed that several large tankers that once serviced Iran are now being used by Russia.
Domestic turmoil
In recent months, Iran has been grappling with an unprecedented energy crisis, exacerbating the Islamic Republic's severe economic woes, which the regime has been unable to resolve. Since September, the Iranian rial has lost half its value against the US dollar, a sharp decline expected to further worsen Iran's already high inflation by increasing the costs of domestic production and imports.
Amid repeated calls by Supreme Leader Ali Khamenei for unity within the government and his criticism of the lack of coordination between the president and parliament, Iranian lawmakers held a closed-door session yesterday (Tuesday) to update President Masoud Pezeshkian on the currency collapse. As the economic crisis deepens, members of Iran's parliament, the Majles, have initiated impeachment proceedings against Economy Minister Hemmati and Energy Minister Ali Akbari over their failure to address the energy crisis. Additionally, lawmakers are pressuring Pezeshkian to dismiss Central Bank Governor Alireza Farzin.
Under Iranian law, a minister (or president) can be impeached by the Majles through a multi-step process that requires significant parliamentary support. However, only ten signatures are needed to launch proceedings, and so far, 89 Majles members have signed the motion.
"The Majles has committed to expediting Hemmati's impeachment unless he and Pezeshkian convince parliament that they are taking effective measures to address the crisis and improve living standards," Iranian media quoted parliamentary sources as saying. Pezeshkian has faced repeated criticism in the press for reappointing officials from former President Ebrahim Raisi's administration, including Akbari and Farzin. Given this, he may support their removal to deflect criticism against himself.
However, before celebrating signs of a no-confidence vote against the Iranian government, it's important to put things into perspective. Impeachment proceedings are not uncommon in Iran. In 2012, the Majles launched impeachment proceedings against then-President Mahmoud Ahmadinejad, bringing him before parliament for questioning. In 2020, 120 lawmakers supported summoning then-President Hassan Rouhani for a hearing, and in 2023, former Industry Minister Reza Fatemi Amin was ousted, just six months after surviving an impeachment vote.
Iranian media suggest that Trump's return to the White House and the revival of his "maximum pressure" policy have exacerbated Iran's economic crisis, contributing to the rial's depreciation and the surge in gold prices in the Iranian market. However, Iranian Foreign Minister Abbas Araghchi told local media on Monday, "Maximum pressure and international decisions have never been effective against Iran… We will not negotiate under threat."
