Iran’s New Oil Chief Faces Blockade and Trustee System Challenges

Iran’s oil minister Mohsen Paknejad resigned on October 4, leaving Hamid Bovard as acting minister. Bovard, the CEO of the National Iranian Oil Company (NIOC), now faces significant challenges, including a US blockade that has severely restricted Iran’s crude oil exports.

The blockade has effectively halted new oil shipments to China since mid-July, with no crude loaded at Iranian terminals since mid-August. This has led to a decline in Iran’s crude production to about 1.8 million barrels per day, roughly half of its pre-war output. Exports have also plummeted, with crude and condensate loadings dropping to around 220,000 to 255,000 barrels per day in August, down from about 740,000 in July.

Bovard’s immediate task is to address the system of intermediaries, or trustees, used to sell sanctioned oil. Recent reports reveal that large cargoes have been sold on credit and at steep discounts to indebted trustees, raising concerns over unpaid revenues. The Oil Ministry has defended the trustee system as a necessity due to sanctions, but the controversy highlights the need for better supervision and management.

While the blockade is beyond the ministry’s control, Bovard may have more influence over the internal oil-sales system. His appointment from within NIOC suggests a focus on operational improvements, including tighter guarantees and recovery of overdue revenues. The effectiveness of his changes will depend on whether they address the systemic issues within the oil-sales network.