It's a Catch-22 situation. Oil prices are climbing amid fears global supply will be seriously disrupted, even critically disrupted, by cutting Iran's exports and concerns Iran will seek to close the strategic Strait of Hormuz, a vital oil artery and the only way in and out of the Persian Gulf.
There's no doubt the sanctions are increasingly biting and they'll get tougher July 1, when a total oil embargo by the 27-member European Union is to take effect.
But the Iranians are resorting to secret oil sales and have ordered their state-owned fleet of 39 supertankers to switch off transponders that allow the shipping industry to track them.
That suggests Tehran's clandestine network is operating at full tilt with benchmark Brent crude pegged at $118 a barrel.
That's still a ways off the record $147 per barrel notched in July 2008 but prices could well go up again, particularly if Iran's exports fall and no progress is made on the thorny nuclear issue at a meeting between Iran and its adversaries next month.
The Financial Times reports that higher oil prices are "insulating Iran from the full impact of the … sanctions on the sale of its crude, providing Tehran with breathing space as it prepares for a new round of nuclear talks with Western nations."
How long that will be the case remains to be seen as the sanctions squeeze tightens.
Meantime, the Center for Global Energy Studies, a London think tank, estimates that Tehran will earn $56 billion from exporting its crude in 2012, the Islamic Republic's third highest earnings ever, "even after factoring in the loss of roughly one-third of its export volume due to sanctions."
That's "more than Iran earned in any year before 2007," the Financial Times noted.
The CGES estimates that without new sanctions Iran would earn around $58 billion in 2012, down 5 percent from $72 billion in 2011.
Even by Washington's calculations, which differ from those used by the CGES, Tehran earned $22 billion in the first quarter of 2012.
"Even if these revenues halve in the next three-quarters of the year, the country will earn $55 billion based on U.S. government calculations, the fourth highest ever," the Financial Times reported.
Still, the International Energy Agency, the West's energy watchdog body in Paris, reported Iranian oil production fell to a 10-year low of 3.38 million barrels per day in February.
Recent oil industry reports suggest Iranian exports have fallen badly from around 2.2 million bpd in February to 1.9 million bpd in March, with a 50 percent cut resulting in a drop of more than $30 billion in annual earnings.
The IEA stressed that output could tumble to levels last seen during the 1980-88 Iran-Iraq war, when both sides' oil industries were strategic targets.
It estimated this could be as much as 15 percent by the end of 2012 due to a sharp reduction in foreign investment that's needed to keep the Islamic Republic's aging fields functioning.
A key element in throttling Iran's oil exports is the March 17 disconnection of Iranian banks hit by European sanctions from the SWIFT global electronic payment system. This impacted heavily on Iranian oil deals which rely on SWIFT, which operates the world's biggest payment platform.
Countries risk being cut off from the U.S. financial system unless it's proved they've substantially reduced imports of Iranian crude.
U.S. President Barack Obama's March 30 go-ahead on tightening sanctions against Iran, due to take effect June 28, has heightened tension with Iran as the two sides square off for trouble in the Persian Gulf.
This is, in turn, pushing oil prices higher, and presumably could bolster Tehran's earnings even though exports are steadily being reduced as Iran, which had been able to shrug off earlier sanctions, is now clearly being hurt.
Iran remains defiant.
In May, it's expected to take delivery of the first of 12 supertankers, each with a capacity of 318,000 deadweight tons, ordered from two Chinese shipyards under a $1.2 billion contract.