Brief: Maximum Pressure Returns

Mobius Intel Brief:

President Trump announced the start of a second ‘maximum pressure’ campaign on Iran yesterday to limit the expansion of Iranian nuclear capabilities.

Key Intel

• Maximum Pressure Context: The ‘maximum pressure’ campaign of President Trump’s first term reduced Iranian crude production by over 1.5 MMb/d in just 14 months. Iranian crude output averaged nearly 3.9 MMb/d in 2017 before crippling under export restrictions to an average of 2.4 MMb/d in 2019. Production rebounded during the final two years of the Biden administration, hitting an average of 2.9 MMb/d in 2023 and 3.3 MMb/d in 2024.

• Developed Shadow Fleet: Years of sanctions have forced Iran to build out its ‘shadow’ tanker fleet for covert exports. Since the start of the Russia-Ukraine War, the ‘big three’ sanctioned producers (Iran, Venezuela, and Russia) have shared a pool of these shadow vessels for exports to receptive buyers (e.g. China). While these developed networks could limit the efficacy of a second ‘maximum pressure’ campaign, conventional buyers of sanctioned barrels have shown subdued interest since the start of the second Trump administration.

Looking Ahead

• The Venezuela Question: President Trump’s second campaign against Iran suggests similar measures could return for Venezuela. However, a Trump envoy to Venezuela in late-Jan/early-Feb resulted in the release of six American prisoners and assurances from the Maduro government that it would accept deported Venezuelan migrants. The regime’s efforts to improve dialogue with the Trump administration could extend sanctions waivers despite Maduro’s dubious election claims last year.

• Venezuela Production Context: The first Trump administration targeted the Maduro regime with a maximum pressure campaign on the Venezuelan government and its assets (e.g. PDVSA). Several waves of sanctions slashed Venezuelan crude production from approximately 1.5 MMb/d in January 2019 to 749 kb/d by September 2019. Venezuelan production hit a monthly low of 392 kb/d in mid-2020 before rebounding under the Biden administration to 998 kb/d in December 2024 — the highest monthly output since June 2019.

• Trump & Saudi Arabia: Saudi production becomes more relevant for global crude markets if a second ‘maximum pressure’ campaign has its intended effect on Iranian output. The kingdom’s spare capacity can easily offset impacted Iranian supplies — at a price.

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