The National Iranian Oil Company is ready to return to the global crude oil market as quickly as possible, the oil minister said.
“International market needs more Iranian oil, which can help push down high prices,” Javad Owji was also quoted as saying by the Oil Ministry’s news portal.
Oil prices rose on Friday and Brent crude surpassed $91 per barrel. WTI crude increased by 52 cents to $90 a barrel, heading for its seventh straight weekly gain.
The Organization of Petroleum Exporting Countries and allies led by Russia, known as OPEC+, agreed earlier this week to stick to moderate rises of 400,000 barrels per day in oil output with the group already struggling to meet existing targets, despite pressure from top consumers to raise production more quickly.
“Despite the resurgence of Covid-19 pandemic and economic uncertainties, OPEC members and its allies are satisfied with the current tariffs. International institutions have projected higher prices in the near future,” Owji said.
Speaking after an OPEC+ meeting, he added that if major economies are concerned about the current prices and the volume of oil supply, they should move to get US sanctions on NIOC lifted.
“My proposition is termination of unilateral American sanctions against Iran to open up space for the return of maximum Iranian crude output to global markets,” he said.
According to the oil minister, the current energy crisis in Europe and other parts of the world will not be defused unless major producers like Iran increase their supplies.
“Many European countries and even the United States are concerned about fuel supply and Iran is ready to help solve the global energy crisis by exporting its oil and derivatives,” he said.
“The unprecedented surge in gas prices in Europe was driven by a fall in gas storage levels. All this is happening while Iran has been deprived of exporting oil for many years. Europeans and Americans are struggling with such an issue while their governments have long imposed illegal and cruel sanctions against our crude oil exports.”
While the sanctions have hit Iran’s economy and pressured different sectors, “evidence shows that the unilateral and trans-regional policy has not only impacted Iran, but also affected people in other countries which, we believe, will spread in the future if the irrational insistence on sanctions against Iran’s oil exports continues”, Owji said.
According to the minister, Iran has repeatedly announced its readiness to increase oil output and help stabilize the market.
NIOC is expected to pump more oil to the markets if Tehran and world powers agree to revive a 2015 nuclear deal that had been abandoned by the former US government in 2018.
The return of Iranian supplies is expected to affect prices that have been recovering as a result of the easing of coronavirus restrictions around the world.
Priming Oilfields
State-run NIOC has been priming oilfields and customer relationships, so it can increase exports if an accord is clinched, officials said.
Under the most optimistic estimates, the country could return to pre-sanctions production of almost 4 million barrels a day in as little as three months.
But there are many hurdles to overcome. Any agreement must fully dismantle the gamut of US barriers on trade, shipping and insurance involving Iranian entities. Even then, buyers may still be reluctant, according to Mohammad Ali Khatibi, a former official at NIOC.
“Our return may be a gradual process rather than swift and sudden; it can’t happen overnight,” Khatibi, also Iran’s former OPEC envoy, said in an interview.
The pace of Iran’s comeback may prove critical for the oil market.
Fuel consumption is on the rebound, as governments distribute vaccines and major economies reopen.
Tehran has already taken advantage of a less hostile climate since US President Joe Biden came to power last January. It is reviving petroleum sales, sending more crude to emboldened Chinese buyers.
Iran’s crude production climbed almost 20% last year to 2.4 million barrels a day, according to data compiled by Bloomberg, although most of that oil is still used domestically.
“Even if the sanctions are not removed, depending on their ability to sell oil in the gray market, they will increase their production further,” said Sara Vakhshouri, president of consultancy SVB Energy International LLC in Washington.
Engineers at NIOC have been rotating crude production between different fields to maintain sufficient reservoir pressure, according to the company’s officials.
“The procedure is crucial for keeping up output levels. Gas injections at older oilfields in the south of the country are playing a similar role,” SVB’s Vakhshouri said.
If there’s a deal with the US, Iran could increase production to almost 4 million barrels a day in three to six months, according to Iman Nasseri, managing director for the Middle East at consultant FGE, who has decades of experience covering the region and worked in Iran.
