Media reports about oil production across the globe are confusing and definitively political along an East-West divide, Alic writes.
Iran is one of the world’s top fuel oil exporters, despite sanctions; the US is poised to overtake Saudi Arabia in terms of “hydrocarbon” production; Pakistan has enough oil to become a second Dubai …
It’s a propaganda race to see who can come out on top—at least in the media. Muddling through media reports that are definitively political along an East-West divide can be confusing. So let’s look at it without the political compass.
Last month, the US mainstream media barraged us with simplistic reports about how the US will soon be producing more oil than Saudi Arabia—making America the world’s top producer. Left out of this story was the fact that the math was a bit skewed: the US may end up producing more total hydrocarbons than Saudi Arabia soon (say, by 2020), but not crude oil, which is what really counts.
This month, Iran joins the campaign with its own missive, courtesy of state-run media, PressTV. Iran claims to be among the world’s biggest exporters of fuel oil despite Western sanctions. (Related Article: Oil Industry Cycles Offer Good Investment Opportunities)
Citing Iranian oil officials, PressTV claims that Iran is selling an average of 16 million liters per day. Since the beginning of the Iranian calendar year (March 2012), Iran has sold around 5 million liters of fuel oil and gas per day to “passing vessels” in the Persian Gulf and Strait of Hormuz.
The US and EU have imposed sanctions on Iran’s oil and financial sectors since early last year. Since August 2012, EU sanctions have prevented EU countries from buying Iranian oil or providing insurance coverage to tankers carrying Iranian crude. Additional sanctions by the US that same month punish banks, insurance companies and shippers involved in getting Iranian oil to market.
Ok, so exactly how much is 16 million liters? About 100,000 barrels of oil. As of 1 January 2012, Iran was the third biggest exporter of oil at about 2.5 million barrels of oil per day. That is down to about 100,000 bpd today (on a good day—and we’re talking about oil and gas, not just oil). According to Iranian officials themselves, the average since March has been about 5 million liters (again, in terms of oil this would be about 31,450 bpd).
By way of comparison, as of 1 January 2012, the top oil exporters were Saudi Arabia (7.6 million bpd), Russia (5 million bpd), Iran (2.5 million bpd), United Arab Emirates (2.4 million), Norway (2.2 million) …. and the US was 10th (1.9 million bpd). (Related Article: Why OPEC is Worried About the U.S. Congress)
So let’s go back to the PressTV statement to the effect that Iran is “among the world’s top exporters”. “Among the top” is an intentionally vague ranking, with no beginning or end. Every exporter could be “among the top” if no parameters are set. It’s meant to be headline-grabbing, and it is. (Not headline-grabbing enough for Western media to pick up on, though, stuck as they still are on “US to overtake Saudi Arabia as Top Oil Producer”.
Are sanctions against Iran “working”? That depends entirely on what they were meant to achieve. They are working in the sense that Iran’s exports are dismally low and taking their toll on domestic socio-economics and there is a high risk of dangerous public unrest. Sanctions are having a slow destabilizing effect on the regime, but they are not yet close to forcing a regime-change. The Iranian political system is designed to absorb a lot of shock.