Oil Daily | Iran's Oil Exports Surge Amid Infrastructure Strain and U.S. Sanctions

【Global Oil Supply and Demand】

Power generation from clean energy increased globally in the first half of the year, driven by China, while fossil fuel power output remained stable due to higher gas and coal use in Europe and the U.S. Wind power generation in Europe fell, leading to greater reliance on fossil fuels.

Russia's natural gas production decreased by 3.2% in the first half of 2025 due to reduced pipeline flows to Europe despite increased exports to China and higher domestic demand. The Power of Siberia pipeline, a key export route to China, is nearly at full capacity.

Germany's offshore wind power installations remained stagnant in the first half of 2025, calling for significant changes in tender terms and pricing to revitalize the sector. Despite plans for new capacity, policy changes are needed to meet ambitious targets for offshore wind energy.

Iran's oil exports surged despite ongoing U.S. sanctions and EU price cap enforcement, with China as the main destination. However, Iran faces infrastructure challenges at home with widespread electricity and water shortages leading to public unrest.

【Oil-Producing Countries Dynamics】

U.S. exports of crude oil, LNG, and coal to China were halted due to a trade war, with China imposing tariffs on U.S. commodities. This situation arises amid upcoming trade talks aimed at resolving tensions and China's diversification of energy suppliers.

【Latest Oil Policies】

The UK government increased guaranteed prices for wind power developers to stimulate investment and meet decarbonization goals. The Contracts for Difference scheme now offers higher price ceilings for offshore and onshore wind projects, aiming to boost capacity and investment.

【Industry News】

California is seeking a buyer for the Benicia refinery to prevent its closure, which would impact the state's fuel supply. The state is engaging potential buyers to maintain refining capacity and mitigate potential fuel price spikes.

European Union new car sales declined in the first half of the year due to the automotive sector's transition to electrification. Hybrid vehicles saw increased sales, but overall sales fell, indicating challenges in the shift to electric vehicles.

【Company News】

Lucid Group launched a collaboration with mineral producers to secure critical minerals for U.S. automotive manufacturing. The initiative aims to reduce reliance on foreign supply chains for essential minerals used in electric vehicle batteries.

Nayara Energy, partly owned by Russia's Rosneft, is experiencing export disruptions following EU sanctions for being a major customer of Russian crude. The sanctions target entities involved in trading Russian oil, affecting Nayara's operations.

TotalEnergies and CMA CGM Group announced a joint venture to provide LNG bunkering services in Rotterdam, aiming to replace fuel oil with LNG in shipping and reduce emissions. This collaboration marks a strategic move to accelerate the energy transition in the maritime sector.

【Others】

Despite expectations of weaker earnings for top oil and gas majors due to lower oil prices, trading divisions face challenges. Geopolitical events and price volatility impacted trading profits, making this quarter difficult for capturing upsides.

Protests erupted in Iran over electricity and water shortages during a heatwave, highlighting infrastructure stress amid record temperatures. Concurrently, Iran's oil exports rose, prioritizing export flows over domestic grid costs.