Senior visiting fellow, George Mason University
Iran's semi-official Fars news agency has stated that Tehran envisions to boost its oil exports to Venezuela, with a target of 860,000 barrels per day within three years.
This plan involves not only exporting oil but also repairing Venezuelan refineries to facilitate this export. The goal is to restore Iran's oil exports to pre-sanctions levels, reaching 2.5 million barrels per day, amid US sanctions.
This is noteworthy given previous efforts by Iranian companies to repair Venezuelan refineries in 2020, particularly the 'Cardon' refinery, which experienced a fire shortly after repairs, and the unsuccessful overhaul of the El Palito refinery.
Iran renewed a €100 million contract for the repair of the El Palito refinery with Venezuela last year, and the facility, operating at 20% capacity, began operations in June 2023. Previously, this refinery had a daily capacity of 140,000 barrels, and it is unclear what its current capacity is.
Iranian customs statistics suggest that the equipment needed for this refinery has not been exported from Iran to Venezuela. It is likely that the Islamic Republic has purchased second-hand equipment from other countries to repair this refinery.
In recent years, Iran's non-oil exports to Venezuela have remained around $20 million annually, equivalent to less than 0.1% of Iran's total non-oil exports.
Amid serious economic isolation, the Iranian regime clings to any small and insignificant international economic deal to show audiences at home that the government is successful in fighting sanctions and instill hope that the economic crisis can be overcome. Minor deals with developing countries in Asia and Africa are trumpeted as major successes.
Iran also signed a gas condensate barter deal with Venezuelan heavy oil, starting in the fall of 2021. Data from the Commodity Intelligence Company, Kepler, indicates that Iran delivered 28 million barrels of gas condensate to Venezuela until January 2023 and bought extra-heavy crude oil from the country for resale to China.
However, since February this year, with the reduction of US oil sanctions against Venezuela, the country has not received any shipments of gas condensate from Iran. This indicates that as soon as Caracas was offered a reprieve from sanctions, it began procurement from other sources.
Iran's ambition to repair Venezuelan refineries and export crude oil to the country is significant considering its own domestic refinery challenges. Iranian refineries have experienced a 10% decline in the past decade due to insufficient maintenance and upgrades, leading to the conversion of 30% of received crude oil into mazut and bitumen, compared to just 4% in modern refineries.
For instance, Iran's largest crude oil refinery, Abadan, converts 47% of the crude oil it receives into mazut and bitumen. The operation of this refinery is, in principle, not economically viable.
Iran had agreements with South Korean and Chinese companies in the mid-2010s aimed at reducing mazut and bitumen production from refineries to 10%. However, these deals were canceled following the US withdrawal in 2018 from the Obama-era JCPOA nuclear deal, and Iran has faced challenges in modernizing and repairing its domestic power plants.
Iran’s oil exports fell from 2.2 million barrels per day in 2017, to less than 300,000 in 2019, after full US sanctions came into force. However, recently Tehran has succeeded to boost exports close to 1.8 million barrels per day, as the Biden administration has failed to enforce the sanctions. China is the main customer of Iran’s illicitly shipped crude.
Venezuela, once possessing a refining capacity of 1.3 million barrels, has seen its capacity diminish to less than 190,000 barrels per day due to refinery aging and inactivity, exacerbated by US sanctions over the past decade.
Secretary of State Antony Blinken made it clear on a visit to Iraq during a regional tour, that threats from Iran on US assets in the region will be countered, with the backing of the Iraqi government.
Iran-backed Hamas invaded Israel killing 1,400 mostly civilians on October 7, and took at least 241 more hostages into the Gaza Strip.
While the US was quick to voice its support for Israel, backing its right to defend itself and offering military support, Iranian proxies have not only stepped up their attacks on Israel’s borders, but the US has also come under fire in the region.
Over 38 attacks have taken place against US facilities, seeing at least 46 personnel injured, in Syria and Iraq. The US has responded only once, leaving the Biden administration open to accusations of weakness, once again.
Two US fighter jets struck weapons and ammunition facilities used by Iran’s Revolutionary Guard Corps and its militia groups in Syria, the Pentagon warning the US will take additional measures if attacks by Iran's proxies continue.
Blinken sent a message to “anyone who might seek to take advantage of the conflict in Gaza to threaten our personnel here or anywhere else in the region: Don’t do it.”
Unabashed, he spoke directly to Tehran. “I made it very clear that the attacks, the threats coming from the militia that are aligned with Iran, are totally unacceptable and we will take every necessary step to protect our people.
“We’re not looking for conflict with Iran – we’ve made that very clear – but we’ll do what’s necessary to protect our personnel, be they military or civilian,” he said, claiming Iraq’s premier, Prime Minister Mohammed al-Sudani, was supportive.
However, following a meeting between al-Sudani and Iran’s supreme leader, Ali Al Khamenei in Tehran, the message looked somewhat more complex.
Khamenei, who has also met in recent days with Hamas’ political leader in exile, Ismail Haniyeh, met with the Iraqi premier, also a Shia muslim, in a bid to hedge support.
“As an important country in the region, Iraq can play a major role in putting political pressure on the US and the occupying regime to stop the massacre of people in Gaza and also in starting a new approach in the Arab and Muslim world,” he wrote on X, as the regime continues to draw the US into the fire.
In no uncertain terms, the regime is doing its utmost to blame the US as the Gaza war offers hope to finally bait the bear. "The longer the current war goes on, the evidence showing the direct role of the US in directing the crimes of the Zionist regime in Gaza becomes more pronounced,” he said on Monday.
Speaking on CNN, former national security advisor to ex-President Donald Trump, John Bolton, criticized Biden for calling for a humanitarian ceasefire in Gaza, supporting Israel’s argument that it will only allow the group, proscribed by countries including the US and UK, to regroup.
“The Biden admin is sliding away from its support of Israel. Nobody has taken into account how Hamas and its puppet masters in Tehran are manipulating public opinion in the US and elsewhere,” he said.
He said that not only is one of America’s closest allies under multiple attacks and threats of attacks by what he calls “a coalition of some of America’s greatest enemies”, he said the conflict is “extraordinarily serious”.
“This isn't about the Gaza Strip, it’s about the survival of Israel and threats to the United States,” he said. While the fears of conflict escalating beyond Israel and Gaza are at the top of the global agenda, Bolton said “the conflict has already spread”, blaming Iran for its being at the root of the escalation.
“There is no doubt here that Iran has called the shots from the beginning. We don’t know what their full strategy is but the center of this conflict is with the mullahs in Tehran,” he said. Attacks on Israel have come from Iran-backed proxies in Lebanon, Syria, Yemen and Iraq.
Slamming the lack of action by the Biden administration in the face of mounting aggression, he said Biden’s deterrence tactics had failed as attacks continue.
“If Iranian surrogate groups kill Americans, the Iranians need to pay a price for it. They don’t take our restraint as a good will gesture, they take it as a weakness,” Bolton said.