Tightened international sanctions against Iran caused its crude oil exports to drop by 39 percent last year, claimed the U.S. Energy Information Administration (EIA) this week, cutting Iran’s net oil export revenue by 27.4 percent despite a rise in oil prices.
According to an EIA estimate, Iran was now exporting just 1.5 million barrels of oil a day, a level unseen since Shi’ite Iran was engaged with a brutal war against Sunni Ba’athist Iraq in 1986. Oil revenue figures were also the lowest since 2009, the EIA said, when oil prices were some 56 percent below the 2012 level.
“Although Iran had been subject to four earlier rounds of United Nations sanctions, these much-tougher measures passed by the United States and the European Union (in 2012) have severely hampered Iran’s ability to export its oil, which directly affected its production of petroleum and petroleum products,” said the EIA
Once the second-biggest oil producer in the Organization of the Petroleum Exporting Countries after Saudi Arabia, Iran is now ranked third in the group behind the Saudis and Iraq. The export of crude and downstream petroleum products accounted for at least half of the government’s revenue, according to the Economist Intelligence Unit.
Nonetheless, Iran remain defiant against the Western sanctions, even claiming last week that that the U.S. sanctions were actually counterproductive and were detrimental to European firms.
“The decision to [impose] economic sanctions against the Islamic Republic of Iran has led to the loss of many economic and trade opportunities for European companies,” told Iran’s Majlis Speaker Ali Larijani during a meeting with Italian Ambassador to Tehran Luca Giansanti on Sunday.
Additionally, state news agencies ran articles this week, highlighting positive gains in other industries, including a 38 percent growth in mineral exports and the discovery of new vast gas reserves in Southern Iran.
Iran’s cement exports touched 13.5 million tons in the last year, predicting that the inauguration of new projects will see national cement production capacity rise by 6.7 million tons by March 2014.
Meanwhile, Fars News Agency said that Iran’s proven crude oil and natural gas reserves were now worth around $37 trillion, with the country set to sell more than $5 billion in natural gas exports to neighbouring Iraq.
Last week, Iran’s Minister of Economic Affairs and Finance, Seyed Shamseddin Hosseini, also insisted that the economy was clawing its way back to health after nearly a year of harsh Western sanctions.
“At first we witnessed inflationary shocks, but then we saw that we could use our domestic capacity to increase our competitiveness,” Hosseini told The Washington Post during a weekend visit to attend an international financial conference.
“They (the West) did not understand the power of our resistance,” Hosseini said. “They thought that by a small change in the foreign exchange rate, Iran’s economy would collapse. But as time goes on, they realize that Iran is adapting and we are changing threats into opportunities.”
Thomas Pickering, a former U.S. undersecretary of state for political affairs, called on the U.S. government to move towards direct diplomacy in dealing with Iran.
“After 30 years of sanctioning and trying to isolate Iran, it is doubtful that pressure alone will change the decisions of Iran’s leaders or get a desired outcome now,” he said.