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Gradual Rise in Iran Oil Output: IEA

Gradual Rise in Iran Oil Output: IEAGradual Rise in Iran Oil Output: IEA

World oil markets will not see a significant rise in Iranian supplies for up to five years even if the OPEC members and world powers clinch a final nuclear deal by end-June, Fatih Birol chief economist and future head of International Energy Agency (IEA) said.

While the likelihood of an immediate jump in Iranian supplies looks slim, the chance of a steep fall in deliveries from other regions is rising as IEA estimates companies will cut investments by as much as $100 billion in 2015 in oil exploration and production due to lower prices, Reuters said in a report.

Iran and six world powers reached a framework nuclear agreement on April 2, spurring hopes for a final deal by end-June that would lift economic sanctions imposed by the West against Tehran's nuclear program.

"In three to five years we may see stronger (oil production) growth coming from Iran assuming Iran and global powers strike a final deal in June," Fatih Birol, who will head the IEA from September, said in an interview.

He said there may not be a big growth in Iranian oil production immediately as Tehran's huge and geological complex fields have not been maintained "in the best way" due to the sanctions.

Iran's oil exports have been cut by more than half to around 1.1 million bpd from a pre-2012 level of 2.5 million bpd, according to reports. Birol sees a limited impact of lifting of sanctions on Iran on global oil prices, which have been halved since June on supply glut mainly from the United States.

While lower oil prices have taken $100 billion of investment from the oil sector in 2015, geopolitical tensions in the Middle East have raised questions over the security of investments by global oil companies in the region, he reiterated.

"We have never seen such a big cut even at the time of financial crisis," he said, referring to a 20 percent cut in investment by global oil firms in 2015 over 2014.

 

Financialtribune.com