Natalia Katona
March has turned into a month of hard power tests for Iran – and so far, it has been quietly exceeding expectations. By effectively blocking the Strait of Hormuz to all but its own cargoes (or the ones that have received their approval), Tehran has demonstrated that the trajectory of the conflict is far from being dictated by its counterparts. Faced with the risk of acute shortages in medium-sour crude, the US administration has been forced into a partial sanctions retreat, allowing Iranian barrels already at sea to re-enter the market. The result is a striking reversal — Iranian crude, once deeply discounted, is now trading at a $1/bbl premium to ICE Brent, while the pool of willing buyers is slowly but steadily widening.
Iran entered the escalation phase with export momentum already building, loading crude at 2.2 million b/d in February – the highest level since 2018. In March, when all other Tehran’s neighbours had their barrels trapped inside the Gulf, Iranian crude exports only eased slightly to 1.9 million b/d. But what mattered more than volumes was pricing power. Iranian Light into China has flipped from a steep $12/bbl discount to a $1/bbl premium to ICE Brent, an extraordinary reversal for a heavily sanctioned grade.
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