Why Does Iran Resist Oil Price Discounts?

Dr Sara Vakhshouri

I wrote this piece because I am frequently asked to explain why Iran does not offer big discounts on the selling price for its oil in order to prevent a drop in exports as a result of sanctions. The issue has surfaced as many of Iran’s oil customers prepare to renew exemptions from US sanctions and question if they could negotiate with the US State Department to buy more Iranian oil at much lower prices.

Aiming to force Tehran to modify its nuclear policy, the US and the EU started to implement unprecedented sanctions against Iranian oil exports this year. The EU oil embargo, sanctions against the Central Bank of Iran, and measures against the provision of insurance for Iranian crude oil shipments have all combined to cause a huge drop in both Iranian oil exports and production. This is a major blow for Iran, since the government depends on oil revenue for some 80% of its income.


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