29 Mar 2024
Tuesday 21 July 2015 - 00:38
Story Code : 172643

Iran's oil comeback: should markets get Ready for even more oil?

Although experts claim that Tehran would need at least a year to restore oil production halted by sanctions, Iran's oil industry is capable of increasing production faster than anyone expects, London-based journalist Javier Blas notes.



According toJavier Blas, a London-based journalist and commodities market expert, Iran could restore its oil production faster thananalysts and traders predict.
"The consensus amonganalysts and traders is that Tehran needs atleast a year aftersanctions are lifted toraise output tothe level prevailing beforerestrictions were imposed in2012," Blas remarked.


Blas referred tothe fact that similar pessimistic assessments forsupply disruptions inVenezuela in2002 and inLibya in2011 were confounded by "quicker-than-expected recoveries."


Tehran used tobe OPEC's second-largest oil producer afterSaudi Arabia. Its pre-sanctions level ofoutput amounted to3.6-3.8 million barrels per day. Since then, Iran's oil production has decreased to2.8 million barrels.

On July 14 Iran's Oil Minister Bijan Namdar Zanganeh claimed that once sanctions are lifted, Iran is planning tobegin withan export increase of500,000 barrels per day, and add 500,000 more barrels insix months. In other words, that means an additional one million barrels a day.
"There really isn't any compelling reason todoubt that Iran could ramp upquite quickly interms oftechnical capacity," noted Antoine Halff, head ofoil markets atthe IEA, asquoted bythe journalist.


An additional one million barrels per day bythe middle of2016 could facilitate a further decline inoil prices, Blas warned.

However, commenting onthe long-anticipated nuclear deal betweenIran and the P5+1, Oilprice.com veteran news reporter Andy Tully still believes that it will take almost a year forIran torestart its oil exports.
"[T]he process can't begin untilthe agreement is signed. That won't come untilearly 2016 atthe earliest because the US Congress has two months tostudy the arrangement, then vote onwhether toreject the deal championed bythe Obama administration. Sanctions probably won't be lifted untilthe end ofthe year if all goes according toplan," Tully pointed out.


Another delay, according tothe reporter, could be caused bythe International Atomic Energy Agency (IAEA), the UN's global nuclear activity watchdog. Quoting IAEA Director General Yukiya Amano, Tully stressed that IAEA will not release its report on "Iran's compliance withthe agreement" untilDecember, 2015.

Tully cited independent oil analyst Gary Ross, the executive chairman atthe New York-based Pira Energy Group, who said that it should take "a good year" betweenthe day the agreement is inked and Iran adds 500,000 barrels ofproduction a day.

Furthermore, according toRoss, the global market should be able toabsorb Iran's additional one million barrels per day "without too much trouble." Although some Western experts are beating their drums aboutChina's economic slowdown, the demand foroil is rising steadily inAsia. Thus far, the market will most likely accommodate Iran's incremental oil production increase withoutany sudden dip inoil prices.

By Sputnik
https://theiranproject.com/vdcc0iqs12bqme8.-ya2.html
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