Iran’s Black Gold

Exports of Iranian crude oil jumped in January, raising concerns that the sanctions relief included in the interim nuclear agreement between Western countries and Tehran is giving a shot in the arm to the struggling Iranian economy that could weaken prospects for a comprehensive deal to derail Iranian nuclear-weapons development.

Oil is the lifeblood of the Iranian economy, and the Obama administration and its allies have spent years trying to strangle its oil industry as a way of forcing Tehran to the negotiating table. The International Energy Agency's monthly oil report estimated that Iranian oil exports spiked by about 100,000 barrels a day in January. That brought Iranian crude exports to just over 1.3 million barrels per day, worth almost $4 billion a month given the current price of oil.

Iran's growing oil revenues come amid signs that the Iranian economy more generally seems to be recovering from the darkest days of rampant inflation and a plunging currency, suggesting that the economic stranglehold that U.S. diplomats say pushed Iran to the negotiating table may be waning. The International Monetary Fund said this week “the pace of contraction in (Iranian) economic activity is slowing” — an assessment that hands a new weapon to opponents of the White House's interim nuclear deal with Tehran, who have long argued that the agreement was giving Iran too much financial relief.

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“Iran is gaining important negotiating leverage, while the United States' leverage is being diminished,” Mark Dubowitz, the executive director of the Foundation for the Defense of Democracies, told FP.

Dubowitz, a proponent of stronger sanctions against Iran, has for months warned that the partial sanctions relief included in the interim nuclear deal would offer large economic dividends to Iran. The White House says Iran would gain roughly $7 billion, but Dubowitz has said the true value of the relief is closer to $20 billion.

“That doesn't bode well for a diplomatic solution” to Iranian nuclear-weapons development, Dubowitz added.

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