Half of Iran's Oil Under Control of the Revolutionary Guard

A recent report by Reuters has revealed that the Islamic Revolutionary Guard Corps (IRGC) has strengthened its control over the country's oil industry, now managing up to 50% of oil exports, which is the main source of income for Tehran and finances its proxy forces across the Middle East. This claim is based on statements from Western officials, security sources, and informed Iranian individuals. According to more than a dozen people who spoke to Reuters, all aspects of the oil trade, from a secret fleet of tankers transporting sanctioned oil covertly to logistics and shell companies primarily selling oil to China, are increasingly influenced by the IRGC. The extent of the IRGC's control over oil exports had not been previously reported. Despite severe Western sanctions designed to limit Iran's energy industry, reimposed by former U.S. President Donald Trump in 2018, the Islamic Republic earns over $50 billion annually from oil exports, which is its main source of foreign currency and primary connection to the global economy. Six experts, including Western officials, security analysts, Iranian sources, and business activists, stated that the IRGC controls up to 50% of Iran's oil exports, a significant increase from about 20% three years ago. Reuters sources declined to be named due to the sensitivity of the matter. Three of these estimates were based on intelligence documents regarding Iran's oil transportation, while others were derived from monitoring the activities of vessels and companies linked to the IRGC. Reuters was unable to determine the exact extent of the IRGC's control. The IRGC's increasing dominance in the oil industry has augmented its influence across all sectors of the Iranian economy and rendered Western sanctions less effective, as Washington has previously designated the IRGC as a terrorist organization. However, Trump's potential return to the White House in January could mean stricter enforcement of sanctions on Iran's oil industry. The Iranian Minister of Oil has stated that Tehran is taking measures to counter any potential restrictions but did not provide details. According to four sources, the IRGC has gradually taken over the territory of state entities such as the National Iranian Oil Company and its subsidiary, the Niko Oil Trading Company. Richard Nephew, former Deputy Special Envoy for Iran, noted that when sanctions limited Iran's oil exports, those running Niko had expertise in the oil industry but lacked experience in circumventing sanctions. He added, 'The IRGC was much more skilled in smuggling but performed poorly in managing oil fields, thus gaining more control over oil exports.' The IRGC, the National Iranian Oil Company, Niko, and the Iranian Foreign Ministry did not respond to requests for comment. According to Nephew, since around 2013, the Islamic Republic has started allocating oil instead of cash to the IRGC and the Quds Force. He stated, 'The IRGC has been adept at finding ways to sell oil even under the pressure of sanctions.' According to estimates from the U.S. Energy Information Administration, Iran's oil revenues reached $53 billion in 2023, compared to $54 billion in 2022, $37 billion in 2021, and $16 billion in 2020. Reuters further reported that China is the largest buyer of Iranian oil, with most purchases made by independent refineries. The IRGC has established shell companies to facilitate trade with buyers in China. One source told Reuters, 'The IRGC sells oil at a discount of $1 to $2 per barrel compared to Niko's prices, as buyers face higher risks when purchasing from the IRGC, which is designated as a terrorist group by the U.S.' The National Iranian Tanker Company, which previously played a key role in oil exports, now provides services to the IRGC. This company conducts ship-to-ship transfers of Iranian oil to tankers operated by the IRGC to send crude oil to China. Sources and ship-tracking data confirm that such transfers are typically used to conceal the oil's origin. The National Iranian Tanker Company did not respond to requests for comment. According to intelligence documents, Qassem Soleimani, the commander of the Quds Force who was killed in a U.S. strike in Baghdad in 2020, established a secret headquarters for the unit's oil smuggling activities that same year. This headquarters was initially managed by Rostam Qasemi, a former oil minister. Reuters could not determine where all the oil money flowing through the IRGC goes. Based on assessments from two security sources monitoring the IRGC's activities, the IRGC's central headquarters and its daily operations have an annual budget of about $1 billion. In August, Israel's National Bureau for Counter Terror Financing, part of its Defense Ministry, imposed sanctions on 18 tankers reportedly involved in transferring oil belonging to the Quds Force. In October, the U.S. Treasury imposed sanctions on 17 additional tankers said to be part of Iran's 'shadow fleet' operating outside the National Iranian Tanker Company's fleet. This action continued with further sanctions against 18 more tankers on December 4.