iran is shipping the most crude in almost five years fortifying its reemergence on the geopolitical stage while posing risks for a fragile global crude market exports have surged to the highest level since us sanctions were reimposed in 2018 according to a range of analysts including kpler ltd svb energy international fge and the international energy agency the vast majority is flowing to china as the world’s biggest importer scoops up cutprice barrels from the islamic republic rebounding sales are the most tangible sign yet that the country while still reeling financially from years of isolation is reasserting itself having started to repair ties with regional rivals fostered relations with asia’s leading power and even begun a tentative diplomatic engagement with washington yet the extra supplies are sapping confidence in an oil market weakened by faltering economic growth and cheap russian cargoes frustrating efforts by iran’s partners in the opec alliance to put a floor under crude prices “iran’s crude exports smashed it last month” said homayoun falakshahi a senior analyst at kpler “iranian crude is extremely interesting for those willing to take the risk to buy” crude shipments have doubled since last autumn to reach 16 million barrels a day in may even as american sanctions remain in place according to the firm production has hit 29 million barrels a day the highest since late 2018 the parisbased iea estimates consultants svb energy petrologistics sa and fge believe that output is even higher maybe surpassing 3 million barrels a day the recovery in flows severely curtailed after former president donald trump quit a nuclear accord with tehran in 2018 could bolster an economy battered by rampant inflation a plunging currency and periodic unrest against hardline president ebrahim raisi it coincides with other signs of iran’s revival a preliminary accord with regional adversary saudi arabia in april efforts to rehabilitate syrian ally bashar alassad and clandestine talks to lower tensions with the white house through negotiations between intermediaries in oman and on the sidelines of united nations meetings washington and tehran are inching toward an understanding to free american prisoners and explore limits on iranian nuclear research in exchange according to a person familiar with the iranian position for leeway to ship more crude a state department official said rumors of a nuclear deal are “false and misleading” and the us priority remains to stop iran from obtaining a nuclear weapon iran says its atomic program is for peaceful purposes only yet additional shipments adding to flows from two other opec members under sanctions russia and venezuela are already happening hitting global oil markets prices have retreated 12 this year to near 75 a barrel in london spurring a flurry of downgrades by forecasters like goldman sachs group inc and jpmorgan chase  co iran’s surge has undermined efforts to stabilize the market by the organization of petroleum exporting countries and its leader saudi arabia which this month announced a new production cutback of 1 million barrels a day to little effect ever since us sanctions were reimposed five years ago iranian crude has been shipped to its few remaining buyers on a socalled “ dark fleet” of tankers often aging and uninsured that deactivate transponders to avoid detection while tankertracking shows that china has remained tehran’s main customer official data registers no imports from the islamic republic in the past year instead purchases have soared from malaysia where iranian cargoes are often sent for transfer to another ship blurring the consignment’s origins “these ghost barrels are not counted in the official total” said svb founder and president sara vakhshouri but “while the whole of opec is trying to cut as much as possible and saudi goes with a voluntary cut every barrel counts” chinese refiners especially smaller independent companies in shandong province are ramping up purchases of iranian cargoes as the price discounts offered by tehran help offset a recent slump in profit margins kpler says iran has had to deepen discounts to its crude to compete with an influx of russian crude pushed out of europe by sanctions according to iman nasseri managing director at fge in dubai the increased flow is drawing heavily from crude it had stockpiled on tankers to satisfy the demand the companies say “china’s willingness to support iran by taking its sanctioned oil suggests a slight improvement in iranchina relations” said greg brew an analyst at consultants eurasia group “all of this supports the view that iran’s position is improving along with its advancing normalization with other regional states” it was beijing that brokered the fledgling detente between iran the saudis a symbol of the growing closeness both countries seek with asia’s rising power as the middle east rivals seeking to defuse decades of proxy conflicts such as the ongoing war in yemen besides the increased appetite from china some analysts have speculated that the surge has been tacitly permitted by a us government intent on keeping gasoline prices in check turning a blind eye could also help as the two countries work on a building a diplomatic channel “there’s been less enforcement of the sanctions by a us administration wanting to counter russian crude in the market while also keeping supply flowing” said fge’s nasseri the impact on oil prices from tehran’s comeback could be limited going forward crude deliveries to china may slow while authorities conduct a crackdown on bitumen mixture which traders suspect is used as a cover for denser and cheaper barrels sold by iran in any case global oil markets are set to swing into a sharp deficit for the rest of the year as china’s postpandemic rebound gathers pace the iea predicts demand will exceed supply by roughly 2 million barrels a day in the second half of the year more than enough to absorb additional iranian flows crude traders remain skeptical of the projected supply tightness in part as the swelling tide of barrels from iran casts a shadow on the outlook “negative supply side anxiety is palpably shaping the mood” said tamas varga an analyst at broker pvm oil associates ltd in london adding that extra iranian flows are part of that with assistance by sharon cho serene cheong alex longley paul wallace and jonathan tirone