Iranian president says government ‘ashamed’ over energy crisis

ISNA reported that Iran and Brazil reached the agreement during a meeting between Deputy Central Bank Governor Asghar Abolhasani and Tatiana Rosito, Brazil's Secretary for International Affairs at the Ministry of Finance, held at a BRICS meeting in South Africa.

The nature of the agreement, whether written or a memorandum of understanding, was not specified.

Both sides highlighted the potential for increased trade and pointed to the need for leveraging BRICS mechanisms to enhance banking and financial ties.

Iran also held separate talks with Russia, India, South Africa, and the UAE, advocating for expanded financial collaboration within the BRICS bloc.

Last January, Iran officially became a member of the China-led BRICS economic organization, as it seeks to overcome the impact of US sanctions and overcome it isolation.

On Thursday, spokesperson Esmail Baghaei denounced the strikes as a clear violation of the UN Charter and international law, citing repeated breaches of the 1974 agreement.

He also called on the UN Security Council to take immediate action to halt what he described as Israel's aggression.

"Israel’s occupation of parts of Syria’s territory and repeated violation of the Arab country’s sovereignty and territorial integrity are tantamount to an act of aggression," he said.

The 1974 Agreement on Disengagement between Israel and Syria, establishing a UN-monitored ceasefire and buffer zone, explicitly stated it was not a peace treaty but a step towards one.

However, following the instability caused by the Syrian civil war and the fall of Bashar Assad’s government, Israel declared the agreement void, leading to increased military activity, including an invasion of the buffer zone and aerial campaigns targeting Syrian military capabilities in December 2024.

On Wednesday, Israeli armed forces launched airstrikes at military sites in southern Syria, following Prime Minister Netanyahu's demand for the "complete demilitarization" of the region.

Residents reported low-flying planes over Damascus before the strikes, which a local monitoring group said targeted sites in Daraa province, including an airport previously hit by Israel. Syrian media also reported a strike near al-Kiswah.

Israel has carried out hundreds of strikes in Syria since 2011, aiming to disrupt Iran's use of the country as a conduit for smuggling supplies to its regional proxies, including Hezbollah.

The sanctions announced on February 24 followed similar measures by the US Treasury in late 2024, targeting ultra-large crude carriers in Iran's shadow fleet.

Such vessels, widely referred to as VLCCs, or very large crude carriers, can carry up to 2 million barrels of oil, far more than what a normal or large tanker can carry.

The VLCCs are essential for Iran's oil shipment, hence their targeting by the US Treasury since October last year.

With the latest US sanctions imposed by the Trump administration, nearly two-thirds of the 126 VLCCs shipping Iranian oil have now been blacklisted, according to oil tanker tracking data, forcing a significant number to abandon Iran and turn to transporting Russian oil.

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Trump administration’s long road

Although stricter sanctions have complicated oil transportation for Iran’s VLCCs, claiming that Iran’s oil exports will face severe disruption and a catastrophic decline would be an exaggeration.

United Against Nuclear Iran (UANI) has identified 503 tankers with a combined capacity of 61 million tons of oil (over 350 million barrels), but sanctions currently cover less than 45% of this total capacity.

An investigation by Iran International shows that to maintain an average daily oil transit of 1.3 million barrels, as observed in recent months, Iran needs 45 VLCCs. Currently, 47 VLCCs linked to Iranian oil smuggling remain unsanctioned.

Meanwhile, dozens of VLCCs worldwide have surpassed 20 years of age in the past year, with each valued at an average of $25 million. Operators of the shadow fleet could potentially purchase some of these aging vessels. Notably, the number of foreign tankers involved in smuggling Iranian oil has surged sevenfold over the past five years.

In January 2024, China banned sanctioned tankers from docking at Shandong Port, its largest terminal for Iranian crude imports, causing Iranian oil offloading to drop to 850,000 barrels per day. However, a recent policy shift privatized part of the port, facilitating the reception of sanctioned crude cargoes. As a result, Iranian oil discharges in China surged to over 1.7 million barrels per day in February, according to industry intelligence firm Kpler.

Thus, it appears that the US still has a long road ahead to achieve what Treasury Secretary Scott Bessent described as a “90% reduction goal” in Iran’s oil exports.

Previously, several oil tanker tracking companies, in interviews with Iran International, estimated that Iran’s daily oil exports could drop by one-third in the coming months. However, they all agreed that such a scenario depends entirely on China's cooperation with the US.

Iran’s Difficult Situation

While foreign energy analysts and media mostly focus on Iran’s oil export volumes, the most critical issue for Iran—and especially for the US—is its oil export revenue.

Oil tanker tracking data from recent months indicate that Iran’s export volume has declined by around 25%. However, Iran’s domestic financial data suggests that its oil revenue has been cut in half, dropping below $1.8 billion per month.

This clearly highlights the soaring costs Iran has incurred to bypass US sanctions in recent months.

Meanwhile, Masoumeh Aghapour, an economic advisor to Iran’s president, acknowledged the country’s severe foreign currency shortages on February 25, just a day after the latest US sanctions targeted oil-related companies and tankers.

“We have a currency problem. Let’s be frank. Trump has played a major role in our forex market. The situation has become exponentially more difficult for us in the past two weeks,” she said.

Since early September, Iran’s national currency, the rial, has lost half of its value due to setbacks in the region and Trump’s election, as he has pledged to significantly cut Tehran’s oil exports.

The remarks by former foreign minister Kamal Kharrazi appear to signal some flexibility in Iran's position vis-à-vis talks with the United States that Khamenei this month expressly rejected.

"We don’t run away from negotiation; after all, we have negotiated many times before," state media outlet IRNA quoted Kharrazi as saying on Wednesday. "However, it is not compatible with our revolutionary and Iranian spirit to yield to the excessive demands and diktats of others.

"At present, there is no choice but to exercise maximum patience, unless a situation arises where the other side also shows a willingness for genuine negotiation rather than dictation," he added.

Trump reinstated the "maximum pressure" campaign of sanctions from his first term and has mooted military action on Iran's disputed nuclear program, prompting foreign minister Abbas Araghchi to say Tehran would not talk amid threats and pressure.

"Mr. Trump’s way is to unilaterally impose his will and expect others to simply obey his orders. We are witnessing this approach today even with regard to Europe," Khamenei's advisor said.

"We must resist until they approach us not with bossiness, pressure, and sanctions, but based on the principle of equality and mutual respect."

Kharrazi heads the Strategic Council on Foreign Relations and has hinted before that Iran could ditch its stated opposition to acquiring nuclear weapons.

Members of the body he leads are by handpicked by Khamenei and its reports and advisories have often presaged major policy shifts by the ruling system.

Iran is capable of producing nuclear weapons and an existential threat could cause a rethink of Khamenei's injunction against them, he said last year.

“The reality is that in an economy built on rent-seeking, where wealth depends on political connections, creativity has no place,” Mohammad-Javad Azari-Jahromi, who served as telecommunications minister under the Rouhani administration, told a gathering of fintech experts in Tehran.

As Iran’s oil-dependent economy has plunged into crisis over the past five years, local economists, some media outlets, and politicians have increasingly criticized the underlying system while also attributing the downturn to US sanctions.

The term “rent-seeking economy” is increasingly used in Iran to describe a system where politically influential individuals and entities secure economic privileges—such as government subsidies, lack of oversight, and market monopolies—to generate profits without contributing significantly to productivity.

A clear example is the Revolutionary Guard receiving over 30% of Iran’s crude oil for export, rather than relying solely on government budget allocations.

Jahromi implicitly referred to that when he said, “Certain entities can obtain oil under the pretext of bypassing sanctions and then decide whether or not to bring the revenue back. This approach is far easier than putting in the effort to create markets and provide services.”

The former minister explained that “In this rent-seeking environment, there is no incentive for individuals to pursue creativity. Ultimately, the system operates through intermediaries.”

Nearly all of Iran’s banks, automakers, petrochemical plants, steel producers, and various other industries are either government-owned or quasi-public, managed by a politically connected elite. Despite their inefficiency and mounting debts, these industries are deemed essential and remain heavily reliant on continuous government support.

Jahromi noted that banks use their capital to engage in the real estate sector instead of helping new industries. They also own many companies and lend money to their own enterprises instead of others.

“The economy is facing fundamental and obvious obstacles. In this situation, the workforce is migrating, and investment is scarce due to the high level of risk involved,” Jahromi said.