Iran Warns of Market Instability as Trump Resurrects “Maximum Pressure” on Oil Exports

Iran's Oil Minister, Mohsen Paknejad, voiced strong concerns on Wednesday regarding the impact of unilateral sanctions on major oil-producing countries, emphasizing that these measures threaten the stability of global oil and energy markets and negatively affect consumers worldwide.

Speaking in talks with OPEC Secretary General Haitham Al Ghais, Paknejad stressed that depoliticizing the oil market is crucial for global energy security, particularly for stakeholders within the oil sector. His comments come just a day after U.S. President Donald Trump revived his "maximum pressure" campaign on Iran with the aim of reducing its oil exports to zero.

Paknejad, who will chair the OPEC Conference in 2025, warned that such sanctions and external pressure on OPEC undermine market stability, jeopardizing not only Iran's oil exports but also broader global energy market health.

The remarks from Iran’s oil minister came shortly after President Trump signed a National Security Presidential Memorandum (NSPM) re-imposing strict measures to curb Iran’s oil exports. The memorandum mandates the U.S. Secretary of State to revoke sanctions waivers, including those related to Iran’s Chabahar port project, and to enforce a relentless campaign aimed at bringing Iran’s oil exports to zero—especially crude exports to China.

Despite these sanctions, Iran has managed to boost its oil exports, reaching six-year highs in mid-2024. Iranian oil exports, primarily sent to China, are estimated to exceed 1 million barrels per day (bpd), despite sanctions on its oil industry. Trump’s renewed “maximum pressure” campaign is seen as a continuation of his administration's previous approach aimed at economically isolating Tehran.

Iranian crude oil exports currently stand at about 1.5 million barrels per day, with China remaining the largest buyer, bypassing U.S. sanctions through indirect routes. Iran’s oil sector has also been bolstered by an intricate network of proxy shipments, particularly via Malaysia, where crude oil imports have skyrocketed, with reports indicating that much of the oil reaching China from Malaysia is indirectly sourced from Iran.

Trump's renewed sanctions could lead to higher oil prices, as the reduction in Iranian crude exports would tighten supply in an already volatile market. Analysts predict that if these sanctions are effectively enforced, the geopolitical landscape could further disrupt energy markets. According to commodities strategist Vivek Dhar from Commonwealth Bank of Australia, a Trump victory in the 2024 U.S. elections could result in more severe sanctions on Iran, boosting oil prices as Iranian exports drop.

Despite these challenges, Iran’s oil exports continue to find a way to reach international markets, with proxy shipments and the use of a “dark fleet” of aging tankers playing a significant role. These tankers, often operating without identifiable insurers and using irregular routes, create concerns over safety, with incidents like tanker collisions and oil spills highlighting the risks associated with such operations.