Iran's oil exports reach 5-year high, with China as top buyer

HOUSTON, Texas/DUBAI/TOKYO -- Iran's exports of crude oil grew by roughly 50% last year to a five-year high of about 1.29 million barrels per day, with the vast majority going to China, helping to prevent a sharp increase in prices triggered by conflict in the Middle East.

Even as the war between Hamas and Israel and attacks by Houthi militants in Yemen on vessels in the Red Sea threaten to disrupt supplies of oil and petroleum products, benchmark oil prices fell on Monday. U.S. West Texas Intermediate crude futures closed down 1.6% at $76.78 per barrel, while European Brent crude dipped 1.4% to $82.40.

While crude prices are 7% higher now than at the end of 2023, they are down nearly 20% from September's highs.

Prices "have risen only that far because of widespread expectations that the global supply-demand balance for oil will loosen in 2024," said Kentaro Matsuda of the Japan Research Institute.

Iran produced 2.99 million barrels of oil daily last year, 440,000 barrels more than in 2022, according to the International Energy Agency, which predicts a further rise of 160,000 barrels in 2024.

This increase is expected to contribute to a less tight market, alongside increases by the U.S. and Brazil. The IEA sees global supply rising by 1.5 million barrels per day to an all-time high this year. The Japan Organization for Metals and Energy Security forecasts the supply-demand balance flipping from a shortfall of 110,000 barrels per day last year to a 600,000-barrel surplus in 2024.

Brisk Chinese demand is encouraging Iran to ramp up production. Roughly 90% of Iran's crude oil exports went to China, data from European research firm Kpler shows.