Iran's Revolutionary Guards Tighten Control Over Oil Industry

Iran's Revolutionary Guards (IRGC) have significantly increased their control over the country's oil exports, now managing up to 50% of the country's oil revenue, a key source of income for Tehran. This marks a significant rise from 20% three years ago, according to various sources, including Western officials, security experts, and insiders within Iran. The IRGC's growing influence over Iran's oil business now encompasses all aspects of the industry, from a shadow fleet of tankers that secretly transport sanctioned crude to front companies facilitating oil sales, mainly to China.

Despite facing harsh Western sanctions, reimposed by the U.S. under President Donald Trump in 2018, Iran's oil exports remain robust, generating more than $50 billion annually. This continues to be the country's largest source of foreign currency and connects it to the global economy, despite efforts to limit its oil revenue.

IRGC's Expanding Role

The IRGC's grip on Iran's oil exports includes overseeing the smuggling operations, with the Guards using their expertise in avoiding sanctions. Their operations now outpace traditional state-run entities, such as the National Iranian Oil Company (NIOC), which once had more control over the oil sector. The IRGC has proven adept at selling oil under the radar, often offering discounts to buyers, particularly in China, in exchange for assuming greater risk.

Reports show that the IRGC controls about 50% of oil exports, a sharp increase from previous years, and has extended its reach into markets by creating front companies. Despite the U.S. Treasury's attempts to sanction these networks, companies such as China's Haokun Energy continue to facilitate the sale of Iranian oil.

The IRGC's operations include extensive use of a "ghost fleet," which refers to a collection of tankers that conceal the origin of the oil being shipped, thereby evading sanctions. The IRGC also uses the Iranian National Tanker Company (NITC) for ship-to-ship transfers, further complicating efforts to track and restrict the flow of Iranian crude.

The revenue generated from these illicit activities plays a significant role in funding Iran's proxy operations across the Middle East, including supporting Hezbollah in Lebanon, Hamas in Gaza, and various militias in Iraq. The financial resources from oil sales, allocated to the IRGC and Quds Force, have helped sustain these operations despite global efforts to curtail them.

As the U.S. prepares for tougher enforcement of sanctions under a second Trump administration, the IRGC’s role in the oil industry may become even more critical. However, with sanctions already a regular part of the landscape, the IRGC has developed resilient strategies to continue its operations, circumventing efforts to block its revenue streams.