Iranian oil back to market quicker than expected

/By Azernews/

By Fatma Babayeva

Iran will be ready to join OPEC’s quota within one or two months of reaching pre-sanctions level of oil production and export, Rokneddin Javadi, Managing Director of National Iranian Oil Company told Bloomberg on May 5.

Earlier, Javadi stated that Iran will reach the pre-sanctions volume of oil production- 4 million barrels per day by July and to pre-sanctions export levels of 2.2 million barrels in one to two months or by the end of the summer.

The voiced commitment of Iran can be evaluated as the country’s interest in pushing oil prices up, while securing the stability in the oversupplied market.

Iran got rid of some economic sanctions in January 2016 after agreeing to significantly reduce the country’s nuclear potential. In this context, the Islamic Republic declared its desire to restore the pre-sanctions level of oil production and regain its previous market share.

Javadi went on to add that Iran doesn’t have any crude oil in floating storage currently, while the country put oil in ships during the sanction years as exports dwindled. The official refused to comment on how much condensate has been stored in the sea.

Iran’s stance was one of the reasons why the Doha gathering of top oil producers on April 17 failed to obtain agreement on freezing participants’ oil output in the global market at the level of January-February 2016. Libya did not participate in the meeting either.

Meanwhile, Saudi Arabia insists other oil producers join freezing act as well, if it puts a cap on its oil production.

The next meeting of the cartel that will be held in Vienne in June 2016 is not expected to resolve the oversupply problem in the global oil market either. Once again, oil producers are going to discuss to revive OPEC’s output quota and try to freeze their oil production during this meeting.

Many experts said before that oil producers need to cut their production rather than curbing it on current production levels. However, none of the major oil producers wants to compromise their share in the market.

The cartel ceased setting production quotas for individual members in 2011 and abandoned an output ceiling entirely in December 2015.

The EU used to import 800,000 barrels of Iranian oil and condensate before sanctions imposed in 2012.

Iran's crude oil sales to Europe are expected to surpass 300,000 barrels per day once the all contracts that the Islamic Republic signed with international companies come into force.

According to the BP’s statistical review of world energy 2015, Iran holds 9.3 percent of the world’s total proven oil reserves and produces 4 percent of the world’s total oil output.