Iran has vowed to increase volumes of crude oil exported to buyers in the European Union by 60 percent over the next two months.
According to the data by the National Iranian Oil Company (NIOC), Iran supplies Europe with 500,000 barrels of crude oil per day. Therefore, NIOC is looking to boost exports to 800,000 bpd.
Following the lifting of sanctions imposed against Iran’s nuclear program, business has been gradually returning to the country with many large oil companies importing crude oil of Iranian origin. Shell, Total and Eni have already purchased 2 million barrels of crude oil from Iran.
The International Energy Agency (IEA) has forecast Iran expanding its crude oil production by 400,000 barrels per day to 4.15 million bpd by 2022. In the meantime, Iran has the right to boost oil output by just 90,000 bpd under the terms of the deal to curb excessive production by members of the Organization of Petroleum Exporting Countries (OPEC) and a number of major crude oil producers outside the cartel, including Russia.
Based on the latest monthly report by OPEC, Iran has increased crude oil production to 3.814 bpd in February from an average of 3.725 bpd in the fourth quarter of 2016, when the deal was reached. This already indicates an 89,000-bpd growth in Iran’s output.
However, oil production volumes are of secondary importance as there is no cap of how much the country can export. Which means that Iran could boost exports even with the current level of production, as long as the country has the excess volume to do so.
As of Monday March 20, the crude oil market continues to feel pressure for the third straight week, as producers in the United States keep on rapidly increasing the numbers of their active rigs. As long as the US maintains their aggressive shale expansion backed by the White House, increasing export volume from a major OPEC member will only add fuel to the fire, burning away at the price of each barrel.