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Iran to boost oil output by 500,000 barrels
Even as oil prices have been falling for weeks due to over production, Iran is aiming to increase its oil production by 500,000 barrels per day now that sanctions have been lifted under a landmark nuclear deal with world powers, a top official said.
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In comments posted on the Oil Ministry’s website, Deputy Oil Minister Roknoddin Javadi said Iran is determined to retake its share of the oil market, which plunged after crippling sanctions were imposed in 2012.
The UN nuclear agency certified Saturday that Iran has met all its commitments under last summer’s agreement, prompting the lifting of a broad range of economic sanctions, including those covering the oil industry. Other sanctions unrelated to Iran’s nuclear program remain in place.
Barclays analysts Alia Moubayed and Michael Cohen say the anticipated ramp-up in Iranian production comes “at a very bad time” for the oil market given the existing pressure on prices. “It is too early to say what kind of market impact Iran’s return will have or how much of Iran’s return is already priced in. Our view is that Iranian wellhead production and sales from existing onshore and offshore storage will surprise the market initially, as the country shows its muscle, leading to downward price pressure,” they added.
Fuelling Stock
- Iran used to export 2.3 million barrels per day but its crude exports fell to 1 million in 2012. Iran’s total production currently stands at 3.1 million barrels per day.
- Iran preparing to increase crude output by 500,000 barrels/day after government order.
- One year before Iran reaches pre-sanctions daily production levels.
- Oil prices stand at a 13-year low of USD 30/barrel.
- An oversupply of some 2 million barrels/day.
- Iran’s regional rival Saudi Arabia is OPEC’s largest producer.
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