Live updates: Follow the latest news on the US-Iran war
Iran has denied it has oil on ships stranded at sea or a surplus to supply to international markets, contradicting US claims.
The US Treasury Department announced on Friday that it was issuing a general licence for the sale and delivery of certain Iranian oil products.
Treasury Secretary Scott Bessent called the move a “narrowly tailored, short-term authorisation permitting the sale of Iranian oil currently stranded at sea”, in a post on X. He also said that Iran “will have difficulty accessing any revenue generated”.
Iran's Oil Ministry responded on Saturday, with spokesman Saman Ghodousi saying it had no oil in tankers at sea nor surplus to supply to international markets, the Mehr news agency reported.
The ministry said the US tactic was a “psychological ploy” and Mr Bessent's remarks were “aimed solely at encouraging buyers and influencing market sentiment”.
Iran's oil industry supplies key petroleum products to major trading partners, and the conflict has sharpened focus on its role as the country's economic lifeline.
“A more prolonged conflict would almost certainly inflict a deeper economic wound. Output would be disrupted, investment postponed and tourism curtailed,” said Neil Shearing, an associate fellow at the London-based think tank Chatham House.
“Iran’s economy will be hit even harder. Based on the impact of wars elsewhere, GDP is likely to fall by more than 10 per cent.”
What oil products does Iran have?
Iran has the third-biggest proven oil reserves, estimated at 208.6 billion barrels in 2025, accounting for nearly 12 per cent globally, data from Worldometers shows.
It was the seventh-largest producer of crude in 2025 with a capacity of 4.19 million barrels per day, according to the US Energy Information Administration.
Its products include crude oil, fuel oil, bitumen (used in road construction), and condensate and refined products that include diesel, petrol and naphtha, which is a flammable liquid hydrocarbon mixture.
Where do Iran's oil exports go?
China is Iran's biggest oil customer, accounting for more than 90 per cent of its exports, according to Visual Capitalist, citing Iranian customs data.
International sanctions have limited the countries where Iran can send its oil, so the country has relied on a strategy to sell its crude at a cheaper price to attract buyers.
Help from China
Iran is also believed to be using shadow tankers, reflagged vessels and ship-to-ship transfers of its oil to bypass restrictions.
The US-China Economic and Security Review Commission (USCC) says Chinese banks, front companies and intermediary firms facilitate those shadow oil transactions.
How crucial is oil to Iran's economy?
The oil sector is a key source of foreign currency and driver of its state budget.
Seaborne crude is of particular importance: Iran boosted those outflows by about 9 per cent between 2023 and 2025, hitting a peak of about 1.68 million bpd last year, data from Kpler shows.
“That means the security of export infrastructure is not a secondary issue for Tehran: it sits close to the centre of the country’s fiscal and external-account stability,” analysts at the Brussels-based market intelligence firm said.
Chinese purchases of oil provide tens of billions of dollars in annual revenue that supports Iran’s government budget and military activities, the USCC noted.
The US strike on March 13 on Kharg Island, which handles about 90 per cent of Iran’s oil exports, raised the question of whether the attack could result in significant economic disruption.
However, on Tuesday, Iran's energy commission said the country's oil activity and exports – and life on Kharg Island – were business as usual.
“Iran can withstand pain and has done so for decades under sanctions,” analysts at Sydney-based Fortress Family Office said.
“They have absorbed significant economic and military pressure and have not capitulated.”
