Iran is earning MORE from their oil sales than they were before the conflict.... and won't run out of oil revenues for at least 4.25 months... but how? There's a blockade! Impossible!
A common misconception that I hear is that Iran is not earning any money from oil sales because the United States implemented a blockade of Iran. But this fails to account for the fact that, at the time of the blockade, Iran had ~160M barrels on vessels or on storage at sea OUTSIDE of the blockade line. As of 6/5, it is estimated by Kpler that Iran STILL has ~72M barrels outside of the U.S. Blockade Line.
So what does the math show us in regards to the revenues Iran is earning NOW compared to what they were earning BEFORE the conflict?
This primarily hinges on two key factors:
1) An INCREASE in the discount Iranian Oil is trading at compared to Brent
- $10/Barrel Discount on February 27th vs $1/Barrel Discount on June 5th
2) An INCREASE in the price of oil
- Brent Price on February 27th: $72.29/Barrel
- Brent Price on June 5th: ~$94/Barrel
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- Total Shift in Price Per Barrel: ($94-$72.29)+($10-$1)= $30.71/barrel
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Average Daily Sales Pre-Conflict: ~1.8M bpd
Total Average Daily Sales Post-Blockade: ~1.36M bpd
- Total Sales by Land: 260,000 bpd
- Total Sales to China by Sea: 1.1M bpd
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Total Daily Revenues Pre-Conflict: $112.1M
- Price Point of Brent: $72.29
- Iranian Discount to Brent: $10/Barrel
- Effective Sales Price per Barrel: $62.29
- Total Revenues: $62.29 x 1,800,000 = $112.1M/Day
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Total Daily Revenues in May:
- Price Point of Brent: ~$94.00
- Iranian Discount to Brent: $1/Barrel
- Effective Sales Price per Barrel: $93.00
- Total Revenues: $93.00 x 1,360,000 = $126.5M/Day
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There is also one VERY important consideration that needs to be accounted for here...
The math, specifically the 72M barrels still at sea East of the Blockade Line, divided by the 1.1M barrels per day being delivered to China, means that Iran will run out of oil to sell in:
72M/1.1M = 65 Days
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This means that Iran STILL has ~2.25 Months until they will ACTUALLY run dry of oil revenues.
But it gets worse...
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Iran, due to the fact that they are selling sanctioned oil to China, and thus it generally is paid on DELIVERY, and NOT paid upon shipment (primarily due to factors such as lack of insurance availability and deliverance guarantee), alongside the need to launder and obscure the funds, means that payments to Iran generally take UP TO 2 Months before they are fully paid out.
Because this has consistently been the case without notable disruption in sales, there is effectively a "rolling two month delay" in terms of Iran's oil sale revenues.
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So instead of it taking 2.25 Months for Iran to stop receiving normal oil revenues...
It will take 4.25 MONTHS before Iran is actually "not receiving normal oil revenues".
And... this fails to account for the fact that oil markets are incompatible with physical supply, and are almost certain to rise significantly over the course of the next 2.25 months.
Realistic timeline until Iran starts to ACTUALLY feel the full bite of the blockade?
FIVE MONTHS.