Although Iran’s crude production is far less than that of global producers, the country is an influential member of the Organization of Petroleum Exporting Countries.
Fereydoun Barkeshli, an Iranian energy analyst and the president of Vienna Energy Research Group, on Wednesday elaborated on the effects of the United States’ decision to pull out of Iran's nuclear deal that was signed in late 2015 and took effect in January 2016, ILNA reported.
“In OPEC and the global markets, Iran is the main rival of Saudi Arabia, OPEC's largest producer,” Barkeshli said, underlining that the volume of OPEC members’ output is not the only leverage in the organization.
“Most of the OPEC producers’ oil passes through Iran’s strategic Strait of Hormoz in the Persian Gulf for export, which further helps the country strengthen its position in the oil market.”
The analyst said the world is in dire need of crude oil, as increasing the collective output of OPEC is not possible and the US will have many barriers to keep producing shale oil after seven or eight years as its production costs will go high.
“Long gone are the days when it was possible to ignore a major oil producer like Iran in the market. Moreover, international crude markets are not in a state to eliminate a provider with more than 150 billion barrels of oil reserves,” he said.
“Refiners are fully aware of the fact that replacing Iran’s oil with that of other providers in a short period will be very costly.”
Barkeshli noted that to change their refining systems, refining complexes require time and financial resources.
Asked about the fact that following US President Donald Trump’s announcement, based on which the country will not remain in the Joint Comprehensive Plan of Action, Iran’s major crude buyers, such as Italy and Japan, have announced that they will stop purchasing Iranian oil in the future.
Barkeshli said this is not surprising, as companies with vast trade and economic ties with the US will not sacrifice their economic benefits for the Islamic Republic.
Trump’s decision to exit the Iran nuclear deal and reinstate sanctions could cost some of Europe’s biggest companies billions.
The US Treasury Department has promised “wind-down” periods of 90 to 180 days to let firms extricate themselves from agreements with Iran and avoid US sanctions. That will do little to assuage the European companies that have billions on the line in recently cut contracts with the country of 80 million people, Qz.com reported.
Energy giants like Total and Royal Dutch Shell have lucrative agreements to work with Iran, while Renault has a joint venture to make 150,000 cars a year, and Franco-German plane maker Airbus has reportedly delivered just three out of 100 jets it agreed to supply Iran, in a deal worth billions.
According to the official, about 1.8 million barrels of Iran’s oil output, which stands at less than 4 million barrel per day, are exported and the rest is used domestically.
