Iran has achieved its highest energy output in nearly half a century, as crude production and exports continue expanding despite escalating tensions and Western sanctions. In 2024, total oil output—including crude and gas liquids—reached approximately 5.1 million barrels per day, marking levels unseen since before 1978. Indicators from the first half of 2025 signal further growth, reinforcing Tehran’s stance that its energy sector remains resilient even under pressure.
China remains the principal destination for Iranian crude. According to Vortexa and Kpler data, Beijing imported an average of 1.4 million bpd of Iranian crude and condensate during the first half of 2025. In June alone, Chinese imports surged to a record 1.8 million bpd, exploiting floating storage reserves accumulated previously.
Despite U. S. legal restrictions, these volumes endure through intricate shipping methods and discounts. As of June, Iranian crude was being sold to China at discounts of $3.30–$3.50 per barrel below Brent—the widest spread since 2023—partly triggered by weak demand from independent Chinese “teapot” refineries and additional U. S. sanctions on mid-tier processing firms in Shandong province. Refineries such as these have cut utilisation rates to around 51 per cent, down from 64 per cent last year.
Iran’s export capacity has been safeguarded by infrastructural alternatives designed to bypass the Strait of Hormuz. The Goreh‑Jask pipeline and Jask terminal—capable of exporting around 300,000 bpd—offer strategic flexibility, although actual utilisation fell to under 70,000 bpd in late 2024. Elsewhere, Saudi Arabia and the UAE have also enhanced their own bypass routes through the Strait to mitigate risk.
Nonetheless, current events pose fresh challenges. Israeli strikes in June damaged parts of oil infrastructure near Tehran and affected the South Pars gas field—responsible for up to 700,000 bpd of condensate. Exports from key terminals such as Kharg Island briefly dropped below 120,000 bpd from a weekly average of 1.7 million bpd. However, Iran manages significant stockpiles—approximately 27.5 million barrels afloat—that can sustain exports for weeks.
Domestic dynamics complicate this energy story further. Iran’s gasoline consumption has outpaced refining capacity by nearly 15–20 per cent since late 2024, triggering reliance on reserves and imports to fill shortfalls. Peak summer demand reached unprecedented levels, surpassing 143 million litres in a single day. Panic-buying followed some military strikes, exposing strains in planning and supply.
Iran’s global energy standing aligns with broader market projections. The International Energy Agency forecasts that global oil supply will exceed demand in 2025 by around 1.8 million bpd, a backdrop that may soften impacts from Iranian output. At the same time, discussions in Washington about lifting U. S. sanctions have raised concerns in Beijing, particularly for its fragmented independent refining sector. Analysts warn that a sudden lifting of sanctions could flood global markets—with an additional 500,000 bpd of Iranian oil—and undercut smaller Chinese players by crushing their margins.
Iran’s energy strategy shows calculated resilience. While nuclear tensions invite military risks, the oil ministry appears intent on diversifying markets, expanding infrastructure, and leveraging geopolitical leverage. Iran Daily reported that production comprised 4.3 million bpd of crude plus around 0.7 million bpd of other liquids in 2024. Analysts advocate that increased domestic use, ageing facilities, and investment gaps could temper the pace of future gains unless Tehran secures long-term funding and technical partnerships.
Observers note the inherent paradox: Iran continues ramping production even as global energy security faces renewed uncertainty. Control over chokepoints such as the Strait of Hormuz remains central. Although no full closure has occurred—the Iranian parliament proposed closure in late June pending council approval—the symbolic threat alone underlines Tehran’s strategic positioning. Global markets, buoyed by inventories and diversified routes, have so far absorbed the shock. Yet any escalation could rapidly unsettle thresholds.