The National Iranian Oil Company’s crude production has experienced a 37% increase in the first five months of the current fiscal year (March 21-Aug. 20) compared with the corresponding period of the previous year.
Based on OPEC's secondary sources data, NIOC’s production was barely 1.9 million barrels per day in 2020 between March and August; the figure has now reached 2.5 million bpd, IRNA reported.
Iran’s oil output stood at 3.9 million bpd, 3.5 million bpd, 2.4 million bpd and 2 million bpd in 2017, 2018, 2019 and 2020 respectively.
The country’s oil production capacity almost halved to 2 million barrels per day since former US president, Donald Trump, withdrew from the Iran nuclear deal in 2018 and announced tough new sanctions that attempted to create an economic siege.
Exports, as high as 2.6 million barrels per day three years ago, dropped to under 500,000 bpd, according to data compiled by Bloomberg.
The Central Bank of Iran’s data show that the country’s economic growth was minus 2.5 last spring as NIOC exports hit a trough. Nonetheless, as NIOC started to sell more oil, economic growth reached 5.4 in the summer of 2020.
CBI statistics indicated that economic growth was minus 7.4 in 2019, which approached 1.4 in 2020.
Global Markets
Despite the upward trend in crude output, oil experts like Fereydoun Barkeshli, who worked for decades in the Iranian oil sector and is president of the Vienna Energy Research Group, believe that if Iran wants to reclaim its standing in the global oil market, it should make a snap decision to reach an agreement with the US sooner rather than later.
A further delay in obtaining sanctions relief will find Tehran facing an increasingly competitive oil market, with OPEC, Russia and several other allies now planning to ramp up crude production by 400,000 bpd every month through the end of 2022.
"Consumers have all the right to go for substitutes when supply isn't available from Iran. Producers and fellow OPEC and non-OPEC members are entitled to fill the vacuum in the market," said Barkeshli.
"I believe that the era of easy oil marketing is over for Iran."
Iran produces mostly heavy and medium sour crudes, competing against grades from Saudi Arabia, Iraq, Russia, the UAE, Oman, Kuwait, Venezuela and others.
Its main export grade is Iran Light, with 33.6 API gravity and 1.46% sulfur content, according to an assay published by state-owned National Iranian Oil Co.
Under the OPEC+ agreement, Iran is exempt from a production quota, but its oil exports have been severely hit by US sanctions.
Since April, Iranian crude production has risen a modest 50,000 bpd, while the rest of the OPEC+ alliance has hiked output by about 1 million bpd, according to S&P Global Platts estimates.
More OPEC+ crude will be coming as a result of the group's new supply accord and several members will be targeting the same key markets in Asia as Iran.
Smart Diplomacy
Regaining the global oil market share requires a strategic program and smart diplomacy, Mostafa Nakhaie, rapporteur of Majlis Energy Commission, told state media.
"We need to boost relations with OPEC members and old customers of our oil. We also should try to find new markets and customers. The next Iranian oil minister should make it a priority to boost oil production.”
The rapporteur said higher output will “improve the country’s security and political power”.
Iran’s daily oil production hovers around 2.5 million barrels and it has not hit 6 million bpd since the 1970s.
Iranian oil officials have acknowledged the task in front of them, but the new government's plans for NIOC remain to be seen.
In the meantime, Barkeshli said NIOC has been negotiating with several Southeast Asian countries that have not typically imported crude, including the Philippines, Thailand, Vietnam and Bangladesh, in addition to its traditional customers in China, India, Japan and South Korea, as well as Europe.
Through the sanctions, China has remained a buyer of Iranian crude and some shipments have also gone to Venezuela, according to market sources.
