Apr 19, 2021, 1:05 PM
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Iran ready to augment oil output by 1m bpd

Tehran, April 19, IRNA – Iran newspaper has reported that Iran enjoys the capacity of producing around four million bpd crude oil saying that the output capacity currently stands at 2.3 bpd and there is consensus that Iran has augmented oil output despite sanctions.

In an April 19 report, Iran newspaper wrote about how the country has increased production and export of oil, noting that the good news is that the amount of oil production and export has reached its top level within two years since the re-imposition of US sanctions on Iran.

The data is not officially reported and the Iranian Oil Ministry officials do not confirm the indices, but secondary sources endorse them based on information such as tanker trackers and statistics of customs, where Iranian oil shipments unloaded there. The newest report by OPEC on the volume of oil production by member states shows Iran’s crude oil production stood at 2.3 million bpd, indicating 137,000 bpd increase in comparison with its daily oil production in March.


 One million bpd Iranian oil en route to China


Wall Street Journal wrote that the production of Iranian oil has reached to its top level within two years thanks to the increase of import by China. Oil Price news agency also reported that Beijing plans to purchase one million oil bpd from Iran.


Reuters quoted trade sources and analysts as saying that China’s oil import from Iran can increase to one bpd in April, which will be nearly half of Saudi oil export to China.

Reuters also reported that Beijing waits for lifting of anti-Iran sanctions by the Biden administration to increase oil import from the Islamic Republic at the highest level.

According to the same report, India is planning to pave the way for purchasing Iranian oil. It is worth mentioning that the increase of oil import from Iran is not only due to waning of US sanctions, because Washington warned Beijing in March that the Chinese should stop purchasing Iranian oil. However, China has been the only country that refused to stop importing crude from Iran during current US sanction campaign.

An Iranian oil expert told Iran newspaper that the only reason behind China’s continuation of crude purchase from Iran is not discount, adding that China is playing the card of buying oil from the Islamic Republic in order to push ahead its political game with the US.


Cheap or competitive oil prices


Iran’s policy for exporting oil during sanction era is based on the fact that market should become a kind of competitive one in order to persuade buyers to ignore foreign pressures; so, one of the strategies is a little discount, which of course has its own price floor; then, international media report that Iran is using discount as a tool to expand its presence in the global oil market.


Wood Mackenzie, an energy research and consultancy company, warned that the oil prices will decline in the end of the current decade, and that the crude price will drop to 40 dollars per barrel, because the global demand for the energy will decrease from 100 million bpd to 35 bpd. Therefore, crude oil producers have little time to earn money from selling their production in the markets.


The biggest oil exporters to China


Iran’s increase of oil export to China has not affected Saudi Arabia’s ratio of oil export to the energy importer country. Reuters reported that it is expected that China will continue oil import from Iran, because private companies are not under political pressure to leave the attractive purchase of oil from the Islamic Republic.
According to official information of China’s custom office, the country imported 11.69 million bpd in last month, showing 21 percent increase in comparison to the same period last year.


Countdown to 1 million bpd of Iran oil


It is not clear when the talks on Iran’s nuclear program will bear fruit, but Iranian oil wells are ready for increase of production and the country has vast amount of crude reservoirs to supply.


Market Watch reported that one million bpd of Iran oil is ready to return to the global market. Now, it is a matter of time to see that the return will happen when demand once cut during the pandemic is revived or it will take place sooner.

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