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Here’s how quickly Iran can increase oil production after reaching an agreement on the nuclear deal


The US, Iran and others may have difficult weeks and months to negotiate, but reviving the 2015 nuclear deal – and the loosening of sanctions – could help Tehran increase oil production greatly. fast.

How fast?

“Once Iran gets back into nuclear compliance – say two months after the deal goes back to the deal – it will try to export as much oil as possible. It will not have to comply with the OPEC + quota and will instead fight for its market share, ”said Henry Rome, senior analyst for global macro at Eurasia Group, on Thursday.

He presents a pair of charts (see below) that show Iran could hit 3.8 million barrels a day within 12 months of reaching the deal:

Eurasia Group

Eurasia Group

Of course, Iran will not export all of that crude. Rome estimates that new exports could reach between 2.2 million and 2.4 million barrels a day. Total exports, including consumption from the country’s significant floating warehouses, could reach 2.7 million barrels a day next year, he said.

Within three months of achieving compliance, Iran’s exports are likely to increase by 700,000 barrels a day, with around 70 million barrels of floating storage going down in three to six months following a deal. Rome estimates production will reach 3.2 million to 3.5 million barrels a day in the first three months, while narrowing the gap between those levels and maximum capacity at 3.8 million barrels a day. it could take another six to nine months, Rome estimated.

The US and Iran had come up with proposals for a temporary deal before June, which would make time for talks on a full deal in the fall, Rome noted. While it is possible that a temporary deal could allow a small amount of Iranian oil to enter the market legally, it is not likely to be a huge concession for the US, he said.

The Wall Street Journal on Wednesday reported that the Biden administration signaled that it would open the door to loosen sanctions Against elements of Iran’s economy, including oil and finance, helps narrow the discrepancies in nuclear talks.

The current level of Iran’s exports is not clear, with the possibility of exporting between 700,000 and 1 million barrels a day, mainly through secret shipments to China, Rome noted.

Brent
BRN00,
+ 0.28%

BRNM21,
+ 0.28%

and West Texas Intermediate
CL00,
+ 0.51%

CLM21,
+ 0.51%

both crude futures contracts earn small profits Thursday. Both benchmarks have risen about 27% so far in 2021, spurred in part by the efforts of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC +, to limit production as they wait for demand for a more complete recovery – a recovery is threatened by a revival in COVID-19 cases outside of the United States

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Meanwhile, a return to Iranian production would intuitively be negative for prices, especially if demand growth remains weak due to continued restrictions on international travel. energy will come in 2022, accompanied by a rapid transition to green energy, Rome said.

He mentioned the Organization of Petroleum Exporting Countries and allies of the Organization of Petroleum Exporting Countries and its allies: “Unless consumption recovers suddenly and strongly, OPEC + will still need management. market. “Outside of OPEC, Iran’s return to the full oil market will make it more difficult for producers to attract investment in production maintenance and expansion.”

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