In 2018 the U.S. imposed sanctions after discontinuing nuclear cooperation pact in 2018, after abandoning the nuclear pact by Trump.
Sanctions hit crude sales, but not petrochemicals or fuels.
Is Iran earns more from crude exports than oil prices?
Fuel exports, often by truck, are hard to track Adds Chinese foreign ministry comment, paragraphs 26-27 LONDON SINGAPORE, Sept. 17 Reuters - Iranian fuel and petrochemical exports have increased in recent years despite stringent U.S. sanctions leaving Iran well placed to expand sales swiftly in Asia and Europe if Washington lifts its curbs, trading sources and officials said:
In 2018 the United States imposed sanctions on Tehran's oil and gas industry in order to choke off the Islamic Republic's main source of revenues in a dispute with Iran over its nuclear work.
The steps crippled crude exports but not sales of fuel and petrochemicals, which are more difficult to trace. Crude can be easily pinpointed by its type and other features, while big oil tankers are located more easily with satellite.
Iran exported nearly 20 billion in 2020 petrochemicals and petroleum products, double the value of its crude exports, tell oil ministry and Central Bank figures. The government reported that they were its main source of revenue in April.
The world is vast and the ways of evading sanctions are endless, Hamid Hosseini told Reuters from Tehran that it is a member of Iran's Oil, Gas and Petrochemical Products Exporters' Union.
Competitive prices and Iran’s location, close to major shipping lanes, made its products attractive, he said.
There are also many more importers of refined products than buyers with refineries configured to process Iranian crude.
In addition, Iran exports some fuel to its neighbours by trucks, which involve small transactions that are tough for the U.S. Treasury to detect.
Tehran has been in talks since April to ratify its nuclear treaty with six world powers after the United States withdrew from the deal in 2018 and revived sanctions. Iran says it will only suspend its nuclear work under the pact if U.S. sanctions are defeated.
Meanwhile, Iran has positioned itself to respond if measures are eased. The CFTC said that while most of the world slashed its refinery throughput during COVID - 19 pandemic, Iranian gasoline exports rose 600% year on year to 8 million tonnes or 180,000 barrels per day.
As recently as 2018 Iran had been importing gasoline.
If Iran exports gasoline products were estimated at $3 billion in 2020, Hosseini said.
Iranian oil production is estimated to be 2 million to 2.5 million bpd, with around 2 million bpd allocated for domestic refineries and roughly 500,000 bpd to exports, a source close to the oil ministry said, adding that Iran could increase crude output by 2 million in two to three months if sanctions were lifted.
Until sanctions were imposed, crude exports were Iran's main revenue source, typically exceeding 2 million bpd and reaching 2.8 million bpd in 2018.
Gasoline was shipped via truck to Afghanistan and Pakistan and delivered across the Gulf by the United Arab Emirates UAE, a source close to Iran's Oil Ministry said, declining to be named.
The Ministry of Foreign Affairs and International Cooperation did not comment.
Iran resumed its fuel exports to Afghanistan in August at the request of the Taliban, a Sunni Muslim group that captured power when USA and other Western forces withdrew and with which Shi'ite Iran had tense relations in the past.
Traders said Iran and some African countries also purchased Iranian gasoline, while several fuel container shipmentshipments were sent to Iraq, which like Iran is a member of OPEC.
The Government of Iraq, which has imported gas and electricity from its neighbor under U.S. waivers for years, did not respond to requests for comment about the gasoline trade.
Petrochemical exports rose to 25 million tonnes in 2020 from about 20 million tonnes in 2019, an Iranian oil ministry bulletin said, while Iranian petrochemical capacity increased to 90 million tonnes a year in 2020 from 77 million tonnes in 2019. It is expected to be more than 100 million tonnes by 2021.
To encourage buyers, trading sources said Iran often offered prices that would cover shipping and insurance costs, along with the extra fees for banking transactions. The extras raised the cost of Iran-made products by about 25%, trading sources said.
Even countries who seek to implement U.S. sanctions have sometimes struggled to halt all business relations with Iran.
India banned imports of Iranian urea in domestic tenders under U.S. pressure but Hosseini said Iranian products were still offered through intermediaries.
India's Fertilizer Ministry (which drafts tenders for imports)... did not respond to requests for comment. Officials in UAE and Iraq also did not immediately respond.
Chinese firms remain the main importer of Iranian crude oil from LPG methanol and many other products, trading sources said.
China and Iran have always followed the principles of equal, fair and win-win collaboration and work within the international legal framework, said the Foreign Minister of China in a statement to Reuters.
It said China opposed long-term sanctions and urged the United States to put out what it said is unilateral jurisdiction.
If the international sanctions were completely met with no strings attached, Iran would export methanol to its traditional locations instead of the vast majority being exported through China, said Geoff Mullett, a methanol specialist at IHS Markit, in terms of other markets like Taiwan, Japan and South Korea and Europe.
A senior analyst at IHS, April Tan, said Iran exports were expected to rise if sanctions dropped, in particular fuel oil and liquefied petroleum gas exports to Asia.