US secondary sanctions to limit Iran’s oil and petroleum products exports went into effect Nov. 5. However, the threat of sanctions had already reduced the actual volume of exports in the past months to an extent that Iran’s crude oil and gas liquids exports had fallen from their peak of 2.7 million barrels per day (mbpd) in May to some 2.2 mbpd in October. While the United States has retreated from its original goal of reducing Iran’s oil exports to zero by issuing some waivers to countries importing Iranian oil, it is clear that Iran won’t manage to return to its peak level of exports as long as US sanctions remain in place.
In order to develop alternative channels for monetizing Iran’s oil, Iranian authorities have activated an old plan to market some of their export potential through the Iran Energy Exchange (IRENEX) which was established in 2012 as a regulated exchange for trading of energy-related products and securities. Up until last week, IRENEX had mainly been an exchange for the trading of petroleum and petrochemical products (not crude oil), gas liquids and electricity. The initial plan to market crude oil through IRENEX had emerged during the last phase of harsh external sanctions on Iran from 2011 to 2013, but it did not materialize due to the controversies related to such deals being a channel to offer rent to selected networks and a platform for corruption.