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Iran: Oil Exports
Country Study > Chapter 3 > The Economy > The War's Impact on the Economy > Oil Exports

OIL EXPORTS


Iraq attacked Iranian ports, the oil terminal at Khark (then the main export teminal for crude oil, also cited as Kharg) Island and, beginning in 1984, tankers shuttling between Khark and Sirri islands in the Persian Gulf. The heavy damage to refineries and pipelines, factories, and industrial sites hurt oil production but did not significantly slow the export of oil until 1986; between 1982 and 1986, Iran produced 2.3 million barrels per dayon average, the bombing of refineries and shuttle tankers, and the continued embargo on purchases of Iranian oil by Japan, the United States, and France contributed to the crisis. By November 1987, Iranian oil exports were estimated at 1 million bpd, down from an estimated 1.9 million bpd the previous month.

The Iraqi strategy of interrupting Iran's export supply line dated back to February 1984, when Iraq attacked tankers shuttling between Khark and Sirri islands. The terminal and cargo handling jetties on Khark Island were hit, reducing the island's export capacity from 6.5 million bpd to 2.5 million bpd within 3 months. This new tactic did not halt Iranian oil exports, but it did decrease them. As a consequence of lower export earnings, the new budgets showed deficits in fiscal years 1985 and 1986.

After the bombings of Khark Island, Iran developed Sirri Island as an alternate terminal. Operations began on Sirri Island in February 1985. Iraq attacked the refinery there on August 12, 1986, temporarily disrupting Iran's oil exports, and again in the fall of 1986, this time inflicting damage from which Iran took longer to recover.

As a consequence of the early 1984 bombings, insurance rates for tankers in the Gulf increased. The increase prompted Iran to extend special incentives to tankers to compensate for the risk involved. During the Iraqi attacks, Iran's main crude oil customer, Japan, banned its tankers from the Khark-Sirri shuttle. After Iran began giving preferential treatment to certain customers, Japan resumed its shipments in July 1984.

The August 1986 attacks on Sirri Island caused oil exports to fall to about one-third of their normal volume (from 1.6 million bpd to 600,000 bpd). An effort was made to develop Larak Island as a loading point, but monsoon winds temporarily closed Abu al Bukush, Larak Island's main oil terminal, in September 1986. Iraqi attacks on Larak Island's chief remaining oil export terminal in November and December 1986 further damaged it. By November 1987, Larak Island had recovered and had become Iran's main export point because of its distance from Iraq's air bases and because of its air defense system.

The oil export terminal at Lavan Island, which for years had exported 200,000 bpd, was also severely damaged in an attack in September 1986. The success of this attack made it clear that Iraq was gradually destroying Iran's export industry. By the end of 1986, the Iraqis had bombed Khark, Sirri, and Larak islands, as well as the shuttle tankers to Sirri and Larak; thirteen tankers had been damaged in missile attacks in August 1986 alone. The war also postponed the completion (projected for 1989) of a large petrochemical plant at Bandar-e Khomeini (formerly known as Bandar Shahpur, but renamed after the Revolution), an Iranian-Japanese venture.

Data as of December 1987




Last Updated: December 1987


Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Iran was first published in 1987. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on Factba.se.

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