The war in Ukraine threatened Iran’s last economic lifeline.
The European Union aims to join the United States and the United Kingdom in sanctioning Russian oil. European diplomats are trying to reach a consensus on a deal to stop Russian oil imports to the bloc that could be signed by leaders meeting in Brussels on May 30.
If an agreement is reached, it would deprive Russia of its biggest oil market.
For Iran, whose exports are already sanctioned, this means the nasty oil market will be filled. Buyers will have more options, which could spark a price war between producers whose crude few want to touch. Russia is the second-largest oil exporter in the world, after Saudi Arabia.
Experts say there has been a drop in Iranian crude oil exports to China since Russia launched its invasion of Ukraine in February, along with a rise in Russian exports to China.
Since the start of the Ukraine war, China has bought more than €7 billion ($7.5 billion) worth of Russian fossil fuels, according to the Center for Research on Energy and Clean Air.
Most of it was crude oil. Meanwhile, Iran’s sales to China have fallen by more than a quarter, analysts say.
“I think right now it’s about a quarter, on the way to becoming a third,” said Amir Handjani, a non-resident fellow at the US thinks tank Quincy Institute for Responsible Statecraft. As Chinese buyers buy less and ask for deeper discounts, Iran could lose vital foreign exchange earnings, he added.
In March, Moscow emerged as an unlikely obstacle to the nuclear deal, when it sought written assurances from the US that its dealings with Iran would not be hampered by Western sanctions against Moscow. He later retracted his demands.