Iran’s oil output surges most since 1997 as sanctions end, OPEC says

Iranian oil production climbed recently through the most in almost two decades following the end of international sanctions, according to OPEC.

Iran increased output by 187,800 barrels a day to 3.13 million a day in February, the largest monthly gain since 1997, the Organization of Petroleum Exporting Countries said in the monthly report. Supply from Saudi Arabia, Qatar and Venezuela — which tentatively agreed with Russia recently to help keep output steady — was mostly unchanged. The group lowered estimates for the amount of crude it’ll need to provide this season amid slower declines being produced outside the organization.

Iran plans to boost crude output to 4 million barrels each day, the greatest level since 2008, before considering joining other suppliers in re-balancing the marketplace, Oil Minister Bijan Zanganeh said on Sunday, according to the Iranian Students News Agency. Iran insists it ought to restore production to pre-sanctions levels before joining any agreement to freeze output, Russian Energy Minister Alexander Novak said on Monday after meeting Zanganeh in Tehran.

“Iran made it clear that it only intends to sign up to the oil production cap once it’s reached a production degree of 4 million barrels a day,” analysts at Commerzbank AG led by Eugen Weinberg said in a report. “This reduces the chances of any wide-scale agreement on production caps.”

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Estimates Trimmed

The OPEC report made no reference to the Feb. 16 accord to “freeze” output, nor to ongoing talks targeted at garnering support using their company producers to participate.

OPEC trimmed estimates for that amount of crude it’ll need to supply this season by about 100,000 barrels a day, to 31.52 million each day. That’s almost 800,000 a day lower than current production levels.

The group’s 13 members pumped 32.28 million barrels a day in February, a drop of 174,800 a day in the previous month, as declines in Iraq and Nigeria a lot more than counterbalance the increase in Iran, based on the report, citing media and forecasting institutions it describes as secondary sources. Iraq’s production was disrupted by the closure of its northern export pipeline to Turkey, while Nigeria’s was curbed by a halt in loadings of their Forcados grade.


U.S. Output

The reduced projections for OPEC’s crude is the consequence of a stronger-than-expected performance elsewhere. The group increased estimates for non-OPEC supply in 2015 and 2016 by 100,000 barrels a day for each year. Non-OPEC output in the first quarter was 400,000 a day greater than the business previously estimated.

“There’s been a reduction in production costs, mainly in the U.S., as well as increased hedging, with producers deciding to produce with losses rather than stopping production,” the audience said.

Production in Russia, OPEC’s partner in the freeze talks, will be 100,000 barrels each day higher this quarter compared with the fourth quarter of 2015 at 11 million each day, before sliding throughout 2016 to be flat overall for that year, according to the report.

Bloomberg News