Persian Files ISSN 2975-0598 Volume 29 Issue 1
Author: Silvia Boltuc
Executive Summary
Iran has launched significant initiatives to enhance its oil refining capacity and optimise its global export strategy. This includes plans to modernise existing refineries, construct new facilities, and expand export destinations, with a focus on Asian, African, and Latin American markets.
Concurrently, the National Iranian Oil Company (NIOC) has announced competitive pricing strategies for its crude oil in January 2025, positioning itself attractively in key international markets despite ongoing sanctions.
This report seeks to analyse Tehran’s oil strategy for 2025, assessing ongoing projects and prospective developments, drawing upon local and international sources alongside SpecialEurasia’s monitoring activities and prior reports.
Background Information
Mohammad Sadegh Azimifar, Deputy Minister of Oil and Director General of the National Iranian Oil Refining and Distribution Company (NIORDC), communicated the Iranian government’s plan to achieve a daily gasoline and diesel production capacity of 130 million litres upon the expiration of the 14th governmental term. This initiative aligns with Tehran’s long-term strategy of refining industry development and export augmentation.
To achieve these objectives:
- Modernisation: Existing refineries are undergoing technological upgrades to enhance production efficiency and reduce environmental consequences.
- New Facilities: Advanced refineries are being built, integrating digital technologies for process management.
Strategic infrastructure projects include:
- Hormozgan Projects: Connecting the Bandar Abbas plant with the Gure-Jask pipeline, a 1,000 km network ensuring raw material stability, and constructing a 460 km pipeline to Rafsanjan to streamline logistics.
- Export Targets: Iran is focusing on established and emerging markets in Asia, Africa, and Latin America, with China, Iraq, and Venezuela being key partners.
Meanwhile, the NIOC has set January 2025 official selling prices (OSPs) for crude oil:
- Asian Markets: Iranian Light crude priced $1.35 above the Oman/Dubai average.
- Europe and Africa: Iranian Light, Heavy, and Forouzan crude discounted between $2.70 and $4.70 per barrel against Brent.
- Mediterranean: Similar discounts for Light, Heavy, and Forouzan crude grades.
These strategies reflect an adaptive approach to balancing competitive pricing with sanctions-imposed constraints.
Iranian Oil Refining Strategies:
Contextual Analysis
The Islamic Republic’s focus on refining capacity and export logistics reveals a dual aim: self-sufficiency in fuel production and diversification of its international energy partnerships. By modernising refineries and constructing strategic infrastructure, Tehran is strengthening its ability to mitigate sanctions and compete in global markets.
The geographic distribution of exports shows a strategic shift toward markets unaffected by Western sanctions, including China, Iraq, and Venezuela. In particular, China’s demand provides a vital lifeline, while collaboration with Venezuela merges ties among sanction-stricken economies.
NIOC employs a flexible, competitive pricing strategy that targets price-sensitive markets in Europe and Africa. This approach likely aims to undercut rival suppliers while maintaining revenue flows critical to the economy. Integrating digital technologies further signals a commitment to long-term competitiveness in an increasingly sophisticated energy market.
Implications
Since their imposition, Western sanctions have affected the Iranian economy and pushed Tehran to adopt different strategies to avoid an internal crisis. If the establishment of Special Economic Zones (SEZs) and the generation of favourable conditions to attract foreign direct investment constitute part of a broader sanctions-evasion strategy, the oil and gas sector serves as another key area in which the Islamic Republic has actively sought to increase revenues and counter economic sanctions.
Augmenting production capabilities and implementing strategic pricing will strengthen Iran’s energy sector’s resilience to external economic pressures. By reinforcing partnerships with foreign key allies in different world regions, Tehran is aligning itself more closely with nations that share similar geopolitical and economic challenges, creating a framework for mutual support and cooperation.
Expansion into African and Latin American markets represents a strategic initiative to diversify the customer base and mitigate geographic risk. Concurrently, ongoing efforts to modernise infrastructure and adopt advanced technologies demonstrate Iran’s capacity to adapt to the constraints imposed by international sanctions.
Furthermore, the Islamic Republic’s integration of cleaner technologies into its refining processes is intended to improve both efficiency and output, as well as to enhance its environmental performance. This may attract markets that prioritise sustainability and lend credibility to its positioning as a modern energy supplier.
Conclusion
In conclusion, Iran’s oil strategy might have implications beyond its domestic economy, signalling a recalibration of regional and global market dynamics.
For potential investors and strategists, Tehran’s initiatives present both opportunities and challenges. The emphasis on infrastructure modernisation, competitive pricing, and strategic partnerships is likely to bolster Iran’s position as a key energy supplier to emerging and non-aligned markets. This trajectory could reshape energy trade flows, particularly in Asia, Africa, and Latin America, offering alternative supply routes to nations seeking diversified sources.
However, the persistence of international sanctions and geopolitical tensions could amplify risks, necessitating careful evaluation of market conditions and regulatory landscapes when engaging with or competing against Iran in the global energy market.
For further reports on the Iranian oil and gas sector and Tehran’s energy strategy, contact us at info@specialeurasia.com and request our consulting services and monitoring products.
